Moray Council leaders have demanded that the Scottish Government reforms its approach to funding local authorities.
The body’s ruling administration group has formally withdrawn proposals to help plug a £12million hole in its budget by increasing council tax by 18%.
But members say plans to balance the books over the coming year by plundering reserves and postponing projects are “not sustainable”.
And council leader Stewart Cree has urged SNP ministers to reform current “undemocratic” methods of funding local authorities in time for next year’s budget.
He said: “To make ends meet this year, the administration has decided to defer certain works and spending, and to draw the remaining shortfall from reserves.
“We have pledged not to cut services or make any redundancies, and we’ll stick to that.
“But this is for one year only – that approach is not sustainable.
“During that year we would expect the Scottish Government to finally make good on its nine-year-old promise to reform local government funding.”
Council convener Allan Wright backed Mr Cree in insisting that Holyrood ministers overhaul local authority funding plans before the next budget.
Mr Wright said: “We all need to remember that reserves can only be spent once, and the following year’s finances are far from certain.
“We have had promises of change, and I hope the Scottish Government will begin to deliver on its promise to review local taxation and the way local authorities are funded.”
The Heldon and Laich member said the administration group was preparing alternative budget proposals in the run-up to a crunch meeting on Wednesday, February 17.
Ruling members are yet to detail the measures they will take to help plug the deficit of almost £12million.
They had anticipated an 18% council tax increase would raise £5million, which would balance the books when combined with £5million from reserves and an approximate £1million from in-house efficiency savings.
The authority now aims to find the £5million it had planned to raise through increasing council tax by postponing improvement projects and siphoning more sums from reserves.
Local authority umbrella group Cosla said that allowing Holyrood to control council purse strings was “no longer tenable”.
A spokesman added: “The Moray position chimes extremely well with the Cosla position in calling for a review of the local government funding system.
“The current balance of funding which gives the Scottish Government the ability to dominate is simply no longer tenable.
“This has never been more evident than the Scottish Government’s approach to this year’s budget settlement, which has completely eroded local democracy and decision making.”
The Scottish Government welcomed Moray Council’s decision to maintain the council tax freeze, but would not be drawn on whether funding systems would be revised.
A spokesman said: “While the Scottish Government awaits final confirmation from Moray Council, the indication they will sign up to the council tax freeze is welcome.
“The Scottish Government’s funding proposals deliver a strong but challenging financial settlement for local government, despite cuts to the central budget by the UK Government.”
The spokesman stressed that, by keeping the levy intact, Moray Council would be entitled to a share of £250million to help cover the costs of integrating health and social care.
Moray’s SNP opposition group criticised the administration’s proposal to increase council tax from the outset, and has argued there is a litany of other money saving measures at the council’s disposal.