Scotland's Finance Secretary John Swinney has given details of a working deal with local government body Cosla over a council tax freeze.
He said the "historic agreement" would mean that councils could freeze the levy for the next three years.
In his address to the Holyrood parliament, Mr Swinney admitted he was unable to deliver all SNP pledges.
Labour's Scottish leader Wendy Alexander said the budget was filled with "broken promises".
She added: "Today is day one, let the government tell us what they are doing, today is a day of broken promises.
"There is no commitment to skills, there is not enough on infrastructure and we will be the highest taxed part of the UK given the SNP plans for a local income tax."
Mr Swinney told MSPs on Wednesday: "Unlike previous budgets in Scotland, this budget will match our spending with our overarching purpose of government.
"It is a major step forward in aligning the whole of the public sector in support of our key objectives.
"We will invest explicitly in making Scotland wealthier and fairer; smarter; healthier; safer and stronger and greener with the overall purpose of increasing sustainable economic growth.
"As part of this transformation we are freeing local government to succeed, removing ring-fencing and enabling councils to allocate resources according to local priorities and in line with a new performance framework."
He also told MSPs that from April next year, 150,00 small firms would see their business rates reduced - "and, in due course, for many removed".
Other key announcements included;
But Mr Swinney's statement on the 150-page budget document disclosed that at least one key pledge - scrapping student debts - was being shelved.
He told MSPs: "I know there is insufficient parliamentary support for student debt servicing or for loans to grants, and we must therefore prioritise funding on policies that we can deliver and which will be supported by parliament."
He also disclosed that a target of 1.5% annual efficiency savings for the public sector was to be increased to 2%, in order to free up £1.6bn.
"The achievement of this target will be a significant challenge and I make it clear that everyone in the public sector must play their part in delivering the clearer and simpler government that will make these savings," said Mr Swinney.
The minority Nationalist administration needs the support of rival parties to get the budget plans through Holyrood.
Scottish Budget - Spending Review 2007 [833KB]
Most computers will open this document automatically, but you may need Adobe Reader
Welsh Councils warn on funding figures
Local councils in Wales have criticised their £3.8bn budget settlement for next year from the assembly government.
Ministers admitted funding was "tight", saying local government funding would rise by 2.3% next year and by 2.6% and 2.8% in the following two years.
Local Government Minister Brian Gibbons called it a "realistic" deal and said councils must make efficiency savings.
The Welsh Local Government Association (WLGA) warned of public services cuts, jobs losses and rising council taxes.
Dr Gibbons said local authorities would receive an additional £85m revenue support grant next year, which would rise to £296m in 2010-11.
He said: "This means that by 2010-11, non-ring fenced funding for local government will top £4bn.
"This is a realistic provisional settlement for local government in what is a tight three-year budget.
"The settlement builds on the substantial growth in assembly government support for local government of recent years."
He said it had allowed councils to "deliver three successive years" of the lowest council tax increases in Wales.
He said specific grants would also contribute to the cost of services such as foundation phase education - a new play-based curriculum for three-to-seven-year-olds - free bus travel and waste management.
Dr Gibbons added that local councillors were best placed to plan councils' budgets according to local needs and called on them to "strike a fair balance between local taxation and local expenditure".
However, the WLGA, which represents council leaders, called this year's settlement "appalling" and warned it could lead to school closures, cuts in services and sharp increases in council tax.
Derek Vaughan, leader of the WLGA, said: "The assembly government seems to think that council tax payers are the solution to their budgetary problems - they can't balance the books, so the people of Wales are expected to cough up."
Glenys Rolsten, manager of the Care and Repair agency in Wrexham, which helps to improve the housing and living conditions of older and disabled people, said her service could not do without council funding.
"We would struggle, we would pare down our service an awful lot and we probably wouldn't have the handy person service locally, or at least it wouldn't be free of charge to the public," she said.
Local Council Grant Rises
Anglesey 1.1%
Blaenau Gwent 1.8%
Bridgend 3.1%
Caerphilly 2.8%
Cardiff 2.8%
Carmarthenshire 2.8%
Ceredigion 2.1%
Conwy 1.1%
Denbighshire 2.3%
Flintshire 2.5%
Gwynedd 1.9%
Merthyr Tydfil 2.5%
Monmouthshire 2.1%
Neath Port Talbot 2.1%
Newport 1.8%
Pembrokeshire 2%
Powys 1%
Rhondda Cynon Taf 2.4%
Swansea 2.3%
Torfaen 2%
Wrexham 2.4%
Vale of Glamorgan 3.6%
All Wales 2.3%
Percentage local council grant settlement rises. Source: Welsh Assembly Government
Copyright © 2025 · All Rights Reserved · Institute of Revenues Rating and Valuation
Warning: Undefined array key "User_id" in /home/irrvnet/public_html/forumalert/inc_footer.php on line 4