The SNP has forced through its budget for next year in the face of fierce opposition to swingeing local government cuts.
John Swinney dismissed concerns that the decision to slash hundreds of millions from council coffers would hit Scotland’s most vulnerable and lead to thousands of job losses.
In an 11th hour intervention, the finance secretary also found an extra £80million to pump into education across the country.
Scottish Labour had suggested raising income tax by 1p in order to offset the sweeping budget cuts, but SNP MSPs rallied round the government to defeat the move.
The budget vote followed noisy anti-cuts protests outside Holyrood.
Mr Swinney said: “I also welcome local authorities’ agreement to the financial settlement that we are providing which, when taken together as a package of funding, will enable them to increase the pace of reform and improve essential public services to communities all over the country.
“As we debate the priorities in the budget, the financial landscape is changing. In the years to come, the Scottish Parliament will acquire even greater responsibilities to exercise fiscal flexibility.
“The Scottish Government will set out its priorities in that respect before parliament rises for the election campaign, but the budget that is before Parliament today establishes very strong foundations for the delivery of public services and the achievement of sustainable economic growth, and for ensuring that the priorities of the people of Scotland are delivered by the government of Scotland.”
The finance secretary also said Labour had “utterly exaggerated” the number of jobs at risk from cuts in the budget.
Hundreds of trade unionists protested outside Holyrood, arguing the local government settlement represented a £350million funding cut that will hit schools and other local services.
But, in the face of accusations of slashing education funding, extra money was found to tackle the attainment gap between rich and poor school pupils.
Mr Swinney said the £80million investment would “help ensure that every child has the opportunity to realise their potential”.
Labour leader Kezia Dugdale branded the spending plans an “austerity budget” as she renewed calls for the Scottish Government to back her party’s proposal for a 1p tax rise.
Mr Swinney said he was protecting pensioners and teachers from a tax “burden” by keeping the Scottish rate of income tax level with the rest of the UK.
Additional measures in the budget include a 3% charge for buyers purchasing a second home or a buy-to-let worth more than £40,000, and almost double free nursery provision to 1,140 hours.
Conservative Murdo Fraser said he welcomed the SNP joining his party in “a new taxpayers’ alliance, working hand-in-glove to protect hard-pressed working families against the tax grabbers in the Labour and Liberal Democrats”.
Liberal Democrat leader Willie Rennie welcomed the boost to the attainment fund but called it “window dressing in a budget that is slashing public services to the core”.