The Scottish Government should take a more strategic approach to allocating funding, a new report has said.
Holyrood’s Finance and Constitution Committee released its budget report on Friday, saying new powers over social security and taxation mean amounts in the public purse will vary from year to year.
MSPs said ministers should consider whether distributing all available funds each year is sustainable.
The committee urged the UK Government to consider its findings and look into allowing the Scottish Parliament to have more powers on borrowing.
Convener Bruce Crawford said there was a need for a medium-term approach, suggesting instituting multi-year budgets for public bodies in a bid to improve forward planning.
He called on the Scottish Government to implement the changes in its next medium-term financial strategy.
Mr Crawford also said MSPs and the Scottish Government must look into whether allocating all available funds each year can be maintained.
He said: “A key theme in this report is the increasing volatility and complexity of Scotland’s budget and the need to look beyond a one-year horizon approach.
“Our report seeks to address the risks and opportunities that arise from an increasingly complex landscape, both politically and economically.
“Our committee recognises the fundamental challenges the Scottish Government faces in managing the volatility that arises from the operation of the fiscal framework, while also meeting its statutory obligation to balance its budget annually.
“In that light, we recommend HM Treasury carefully examine the issues raised in our report when considering the Scottish Government’s request for additional resource borrowing and reserve powers to help manage volatility.”
He added: “We are also of the view, however, that there needs to be a clear strategy for the use of the existing budget management tools.
“We recommend therefore that the Scottish Government’s next medium-term financial strategy should set out the basis for a more strategic approach to budgetary management.
“It should look beyond the current annualised approach and seek to address medium-term volatility and risk, as well as the possibility of multi-annual budgets for the public bodies.
“But the committee is also aware it will be challenging to develop this approach in the absence of a UK comprehensive spending review.”
On the yearly distribution of funds, Mr Crawford said: “Our committee recognises there will always be political pressure to allocate all available resources on an annual basis.
“But both the Government and the Parliament now need to consider whether this is sustainable.
“We are navigating new territory together here and the decisions we take about prudent financial reserves may require a different approach and perspective.”
A Scottish Government spokesman said: “Our budget delivers for vital public services, helps us meet our world-leading ambition of tackling the climate emergency and tackles the root causes of poverty.
“We are prioritising actions that have the greatest impact on improving lives across Scotland now.
“Not only do our proposals provide a fair funding settlement for councils across Scotland, they also maintain our fairer tax system and deliver a record investment in health and care.
“Our spending plans will also support low-income households which are being hit the hardest by the UK Government’s benefit cuts.
“Based on previous estimates, we expect to spend at least £1.4 billion to mitigate the worst effects of these cuts and tackle child poverty head-on.
“We urge Parliament to work constructively towards having a new Scottish Budget agreed and in place before April 1 2020.”