Finance Secretary John Swinney has warned councils not to come to him for extra cash after local government staff threatened more strikes over pay.
The three unions involved in the talks turned down an offer of 2.5% over one year, claiming it was effectively the same as a previous one.
Industrial action last month meant schools were closed, ferries did not run and rubbish was uncollected.
Mr Swinney said he operated within a fixed budget and there was no reserve.
Up to 150,000 members of the GMB, Unite and Unison unions walked out on 20 August after a 2.5% pay deal over three years was rejected.
After further discussions, councils said this year's pay offer could not be increased.
Jimmy Farrelly, a regional official of Unite, said the employers had "indicated" they would offer a one-year deal that would take into account recent rises in inflation.
"However today they came back with a one-year deal of just 2.5%, which is exactly the same as their previous offer," he said.
"This is a total misjudgement of local government workers' commitment to fight for a decent living wage," he said.
"We are extremely disappointed with their decision which will lead to an escalation of strike action."
"I have no reserve resources available that I can allocate to any particular circumstance
John Swinney Finance secretary
He said the three unions would meet within the next week to co-ordinate strike dates.
Councillor Michael Cook of the local authority umbrella body Cosla said employers had listened "very carefully" to concerns raised by the unions.
"The problem for us is that whilst we do sympathise with our workforce and the monetary pressures they are facing we have a major difficulty because we are facing exactly the same pressures on budgets across the board," said Mr Cook.
He said the employers were willing, jointly with the unions, to make the Scottish Government "fully aware" of the issues.
Mr Swinney said councils should not look to the government for extra cash and it was "essential" that both parties get back round the table.
He said: "I am in very similar circumstances to local government.
"It operates within a fixed budget allocated by me but I also operate on a fixed budget, on behalf of the Scottish Government, given to the Scottish Parliament by the Chancellor of the Exchequer and the UK Government.
"We have allocated our budget.
"We have given an allocation to local government which has seen local government increasing its share of the Scottish budget during the course of this spending review period.
"I have no reserve resources available that I can allocate to any particular circumstance. I encourage both parties to try to resolve the issue within that allocation."
In a similar dispute over a below-inflation pay offer, Public and Commercial Services union (PCS) workers in five agencies and public bodies voted for strike action and work-to-rule.
Staff from the Scottish Courts Service, Crown Office and Procurator Fiscal Service, sportscotland and the National Museums of Scotland are unhappy with a 2% pay offer.
Eddie Reilly, PCS Scottish secretary, said a one-day strike could mean prisoners being held in custody longer than normal, and others granted bail.
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