Commissioners looking at the links between the Scottish parliament and councils will take evidence on the crucial issue of funding.
Neil McIntosh, commission chairman and former chief executive in Strathclyde Region, speaking at the launch of a consultation paper on the parameters for the inquiry, said: "It will not be possible to look at the relationship between local government and the Scottish parliament and not recognise the financial background that influences that relationship."
The investigation would not be credible if it did not consider the financing of local government. "But we do not want it to subsume all other issues," Mr McIntosh said.
Matt Smith, fellow commissioner and Scottish secretary of Unison, added: "Local government will want to comment on funding but it's not a Layfield 2." Sir Frank Layfield's report into the funding of councils was published in 1976.
Mr McIntosh's commission was invited by the Secretary of State to consider radical options for restructuring councils - including Cabinet style administration, directly elected provosts, enabling authorities and ways of involving the community.
"There's a need for a critical examination of how councils work, and we'll be looking at what seems best in the Scottish context," Mr McIntosh said. "We have to be prepared to look at alternatives. Some aspects of local government have been in existence for all time. It's right to question whether they will survive future arrangements."
The eight commissioners will tour the country over the next few months talking to councils and community groups, and commissioning research to support their work. They will submit a final report, with recommendations and options, to the Scottish parliament's First Minister in May next year.
Meanwhile, the Convention of Scottish Local Authorities has welcomed the Government's promise to relax central control on council spending.
Ministers want to end capping and allow more leeway for council taxation of local businesses.
Keith Geddes, Cosla president, said: "The control by the Secretary of State of 80 per cent of councils' income simply distorts any idea of local accountability."
The Government is to publish a consultation paper later this year, but issues will be settled by the Scottish parliament.