Referendum, as one of the most important institutes of democratic society that enables citizens to participate directly in the government, has experienced a sort of renaissance in a number of countries over the last few decades. Although a slight progress is visible in Croatia, it is still insufficient compared to other countries. The paper deals with referendum through its legislative framework. It compares state to the local referendum, and highlights the shortcomings of their legislative arrangements. Disadvantages are pointed out through the examples of the state referendums held in the Republic of Croatia to this day. The Croatian referendum experience is very poor with only three state referendums and several local referendums. The reason for this can be found in the awareness of both politicians and the people themselves. Politicians are reluctant to share power with the people, and the people do not show enough interest in the referendum, as witnessed by the last two national referendums. Such a problem can be found in a restrictive referendum legislature, especially when it comes to a referendum based on citizens' initiatives. At the end of the paper, possible solutions are offered, based on examples of referendum practices and referendum legislation of some European countries.