The objective of this paper is to examine the major constitutional constraints facing local governments in Nigeria from the Development school perspective. This is because the failure of the councils to discharge their role well has tended to make them unpopular before the citizens, as council officials are better known for their ability to squander funds meant for service delivery at the local level. The problem of the local governments is even compounded by the unbridled interference of the state governments. In many cases, elected council executives are dissolved by the state governments without due process. Some are suspended for reasons that more often than not border on party politics. Constitutionally, local governments in Nigeria are not autonomous; they are creations of their respective states, which make it difficult for them to exercise financial independence. Analysts have identified this lack of independence as the bane of effective local government operation in the country. The state governments have a stranglehold on the local government system, and this is accentuated by the fact that the election of most council officials is sponsored by the state governors. The governors' control of the grassroots through the elected councils is often seen as a measure of their control of the states' political structures. Buttressing this position on the autonomy of the local councils recently, Eme (2014) revealed that virtually all the corruption cases against former state governors before the Economic and Financial Crimes Commission and the Independent Corrupt Practices and Other Related Offences Commission have their roots in the state/local government joint accounts. This paper examined these issues and concludes by positing that as the debate over local government autonomy intensifies, they may be a major constitutional crisis in the polity if the issue of the fiscal powers and responsibilities of the local governments is not properly addressed