Frank McAveety, leader of Glasgow City Council, accused Mr Swinney of trying to force local authorities to sign up to a new package of demands, including the council tax freeze, or lose tens of millions of pounds.
The backlash mounted yesterday as council leaders objected to the “draconian” proposal, which would see cash allocated to local authorities cut if they failed to maintain the freeze, retain teacher/pupil ratios or integrate health and social care.
A total of £408 million has been set aside by the Scottish Government for councils to help meet the demands.
The cash would be clawed back from councils should they fail to deliver. They have until 9 February to respond.
Edinburgh City Council would lose out on £33 million and Glasgow on £45m if they do not fall into line.
It is estimated Moray Council, which intended to raise its council tax, would lose out on £17m. North and South Lanarkshire would lose £20m each.
Last night Mr McAveety said: “John Swinney is telling local councils you lot better implement this budget. If you don’t I’m going to hit you with millions upon millions of pounds of penalties. This isn’t the partnership Mr Swinney once boasted about with local government. it’s dictatorship.
“If Glasgow refuses to implement Mr Swinney’s budget we face an additional penalty payment of £45m. [He is] acting like a money lender – if you don’t pay up and make his cuts the penalties get bigger and bigger and bigger.
“These are the most punitive sanctions in the history of local government in Scotland. ”
At First Minister’s Questions Scottish Labour leader Kezia Dugdale accused Mr Swinney of “acting like a Tory” by “enforcing austerity” .
Edinburgh City Council leader Andrew Burns said Mr Swinney’s plans, which were contained in a letter from the Finance Secretary, were a “complete disgrace”, which made “an utter mockery of any semblance of a belief in local democracy”. A Scottish Government spokesman said: “All councils will continue to receive their fair share of the 2016-17 final settlement, which we acknowledge is strong but challenging as a result of UK government cuts to the central budget.”