Scottish councils face their most difficult spending choices in years, according to the official watchdog.
The Accounts Commission warns that local authorities may have to cut services to deal with inflation, the cost of living and the impact of Covid.
It says two thirds will have to use cash reserves to bridge the total £400m gap.
However the Scottish government says it has boosted council funding in real terms by £2.2bn since 2013-14. The Accounts Commission said that even with extra Covid funding in 2021-22 councils had to make ‘significant’ savings last year to balance their budgets.
It warns that many councils have also used reserves to fund vital services and are expected to do the same next year.
Accounts Commission chair William Moyes said some council services may have to be reduced or cut as local authorities grapple with the ‘increasingly desperate’ cost of living crisis and rising demand.
‘They're going to have to dig into reserves, many councils, just to balance the budget which is what they're required to do," he told BBC Scotland.
‘But digging in to reserves to run day-to-day services is not a sustainable strategy. So overall it's a tough settlement, it's a tough future.’
