Cosla, which represents Scotland’s councils, fears without additional cash from the Scottish Government, authorities will be “struggling to deliver even the basic, essential services that communities rely on”.
Its president Shona Morrison warned that current Government spending plans could see council services “either significantly reduced, cut, or stopped altogether”.
She was speaking as the organisation, which represents Scotland’s 32 local authorities, issued an “SOS call” to “save our services”.
The £1 billion shortfall council leaders say they are facing is equivalent to local authorities’ entire budget for early learning and childcare, or total net revenue spending on roads, transport, sport and culture combined.
It would also pay for about 17,500 teachers – around 30 per cent of the current total – Cosla said.
With 70 per cent of council cash used on staffing, Ms Morrison said it is “inevitable that current spending plans will lead to job losses”.
Deputy First Minister John Swinney will reveal how much funding councils will get in 2023-24 in the Scottish budget on December 15.
But Cosla leaders said the Government has already laid out plans for “flat cash” funding – meaning money for councils will not rise in line with soaring inflation.
Ms Morrison said council leaders appreciate “money is extremely tight”.
Cosla vice-president Steven Heddle said the flat cash deal “looked difficult for us” when it was announced in May, but rising energy costs and inflation since then mean “local government is now on extremely dangerous ground”.
Finance directors from all 32 Scottish local authorities have already written an “unprecedented” letter to Mr John Swinney to highlight their “immediate concerns”.
Mr Heddle warned: “What we will now face is councils struggling to deliver even the basic, essential services that communities rely on.
Cosla resources spokeswoman Katie Hagmann said councils “are at a crisis point like never before”.
She added: “The impact for communities is serious and needs to be reconsidered. The financial impacts for other parts of the public sector are also serious.
“When councils can’t focus spend on prevention, for example on preventing ill health, services like the NHS will end up spending significantly more money when issues become more serious.
“Directors of finance across Scotland’s councils are sufficiently concerned about the financial sustainability of councils that they have written to the Deputy First Minister outlining their concerns.
“This really is an SOS call from Scotland’s councils – people in communities across Scotland will be pulled into further poverty and uncertainty without adequate funding for the vital services that support them.”
Responding to Cosla, Mr Swinney said: “The Scottish Government recognises the crucial role councils and their employees play in our communities across Scotland and the challenging financial circumstances they face.
“The Scottish Government’s settlements from the UK Government have suffered a decade of austerity with average real terms cuts of over 5% equating to a loss of £18 billion.
“Despite this, local authority revenue funding is £2.2 billion or 22.9% higher in cash terms in the current financial year than it was in 2013-14.
“Future spending decisions will be outlined as part of the 2023-24 Scottish budget on December 15.”