27 counties face cash crisis after exhausting their budgets

Kenya: Revenue Allocation (CRA), said the 27 counties in the red failed to comply with the commission's guidelines on spending with most accused of unilaterally seeking to inflate their budgets.

He said the 20 counties that had complied with the CRA ceilings by January 13 are Baringo, Bomet, Bungoma, Elgeyo Marakwet, Garissa, Kakamega, Kisii, Nandi, Narok, Nyamira, Nyeri, Wajir, West Pokot, Vihiga, Uasin Gishu, Taita Taveta, Busia, Murang'a, Meru and Marsabit.

"Of the 27 that have not complied, so far only Kiambu has held discussions with CRA, but has not yet presented its supplementary budget to Controller of Budget," Cheserem explained.

However, 10 counties among them Isiolo, Kajiado, Kitui, Kirinyaga, Kwale, Lamu, Meru, Siaya, Trans Nzoia and Turkana have held discussions with CRA and are reworking their ceilings. The report is titled "Status Report on Compliance of Counties with CRA Ceiling".

A memo from the Office of the Controller of Budget shows that most of the counties are yet to pay workers their December salaries.

Huge debts

But, most of the counties that complied with their budget ceilings still owe their suppliers and contractors millions of shillings dating back to last year.

"County budget ceilings were set to enable counties prioritise projects. It is in line with CRA's mandate as stated in Article 216 of the Constitution," said Cheserem.

He said: "(The) 27 counties may not be able to pay salaries because county assemblies passed budgets without adhering to ceilings."

The counties that have overshot their ceilings can blame it on the budgets of county assemblies or county executives being beyond the recommended Sh294 million.

Their budgets, rejected by the CRA and the Controller of Budget, will not be sufficient to pay allowances for governors, salaries for chief officers, assembly members and county staff.

Of the Sh238 billion share of national revenue allocated to county governments by the Inter-Governmental Budget and Economic Council (IBEC), the money allocated for services is Sh207.8 billion, while that allocated to the new county structure that includes executives and assemblies is Sh30 billion.

The ceilings were introduced to ensure that money meant for development is not redirected to recurrent expenditure.

In the CRA's recommendations, all 47 county assemblies are expected to spend a total of Sh16 billion on salaries, allowances, gratuity and pension for county assembly members, including Speakers, other staff and mileage, among other payments. County executives are expected to spend a total of Sh13 billion on the same.

But four counties are not willing to make any changes even after discussions with the CRA.

"Machakos came once and has never returned. It is a pity that they have totally rejected any assistance. The others are Nairobi and Samburu," said Cheserem.

However, Nyandarua has tentatively scheduled a meeting with CRA next week on February 4.

Cheserem said the ceilings have helped reduce unnecessary trips by county officials including members to "Singapore, Israel and Rwanda".

In the memo by Controller of Budget Agnes Odhiambo, Homa Bay County has exhausted the 50 per cent allocation, not yet paid December salaries and has no plans to mitigate the looming financial crisis.

"The Homa Bay County Government has been accused of refusing to adhere to the ceilings and the COB (Controller of Budget) recommends the CRA to call the representatives for discussions," Mrs Odhiambo said.

Homa Bay and Nakuru counties have been singled out for their poor economic status with the two counties yet to pay staff salaries for December last year.

"Nakuru County has exhausted the 50 per cent allocation and has not yet paid the December salaries and is unable to undertake other operations," reads the report in part.

"The county assembly has no plans of mitigating the looming financial crisis, has refused to adhere to the ceilings and is currently on recess," it says.

Kilifi County has also exhausted its allocation after funding bursaries and scholarships and lacks any plans to avoid a full financial crisis, the report says.

The CRA's move effectively bars the affected counties from accessing funds for the remainder of the 2014-2015 financial year, putting on hold their administrative and development functions.