Scottish secretary Michael Forsyth invited councils at a finance meeting last week to submit bids for the first time for capital programmes starting in 1997-98.
Competitive bidding for funds over three years, or even longer, had 'a considerable advantage for councils over the previous arrangements by removing any uncertainty over the future funding of major projects', he said.
'It benefits the taxpayer by ensuring that the best possible projects are the ones that get the public funds.'
'But we recognise that it is now in place, and no doubt there will be bids from local authorities for resources,' he said.
Councils also claimed to have wrong-footed Mr Forsyth at the meeting by the modesty of their financial claim for next financial year.
Cosla said ministers had costed funding papers drawn up by officials at an extra £900m for 1997-98.
However, Mr Geddes put in a claim for £180m, equivalent to 3% on the current year's budgets and sufficient simply to cover inflation and new burdens.
Next year's settlement inevitably goes hand-in-hand with steep rises in council taxes, increases in charges, cuts in services and compulsory job losses, Mr Geddes said afterwards. 'We believe the Scottish secretary is planning a 1.4%, or £77m, cut in government grant.'
Scottish Office minister George Kynoch later accused councils of scaremongering over next year's financial forecasts.
He said he was surprised, given an apparent lack of financial controls and management systems in operation in councils, that their representatives were able to forecast what was going to happen next year.