Councils receive the majority of their funding from the Scottish Government, through Aggregate External Finance (AEF). AEF consists of three parts: Revenue Support Grants, Non-Domestic Rates, and Income and Specific Grants. The level of central government support for each authority is determined by the Cabinet Secretary for Finance and the Constitution, currently Derek Mackay MSP, and is distributed by the Finance and Central Services Department of the Scottish Government. Councils obtain additional income through the Council Tax, that the council itself sets.
Scottish councils co-operate through, and are represented collectively by, the Convention of Scottish Local Authorities (COSLA).
The history of Scottish local government mainly surrounds involves the counties of Scotland. The counties have their origins in the sheriffdoms or shires over which a sheriff (a contraction of shire reeve) exercised jurisdiction.
Malcolm III appears to have introduced sheriffs as part of a policy of replacing native "Celtic" forms of government with Anglo Saxon and Norman feudal structures. This was continued by his sons Edgar, Alexander I and in particular David I. David completed the division of the country into sheriffdoms by the conversion of existing thanedoms.
From the seventeenth century the shires started to be used for local administration apart from judicial functions. In 1667 Commissioners of Supply were appointed in each sheriffdom to collect the land tax. The commissioners eventually assumed other duties in the county. In 1858 police forces were established in each county under the Police (Scotland) Act 1857.
As a result of the dual system of local government, burghs (of which there were various types) often had a high degree of autonomy.
Between 1890 and 1975 local government in Scotland was organised with county councils (including four counties of cities) and various lower-level units. Between 1890 and 1929, there were parish councils and town councils, but with the passing of the Local Government (Scotland) Act 1929, the functions of parish councils were passed to larger district councils and a distinction was made between large burghs (i.e. those with a population of 20,000 or more) and small burghs. This system was further refined by the passing of the Local Government (Scotland) Act 1947.