Counties stare at cash crisis as committee rejects revenue sharing bill

County governments are staring at a cash crunch after the Senate Finance Committee rejected a key revenue-sharing law with just two days to go before the House adjourns for the August 8 election.

The Division of Revenue Bill 2017, crucial to unlocking the sharing of revenue between the national and county governments in the 2017/2018 financial year that gets underway next month, was thrown out yesterday.

Rejected the Bill

The Mandera Senator Billow Kerrow-chaired committee rejected the Bill even as an impasse between the Senate and the National Assembly over how much should be given to the 47 counties persisted.

“In terms of equitable share between the county and national governments, there is no change. It still proposes Sh291 billion for counties, which we rejected last time.”

“Consequently, we have said there is no merit in us looking at it any more. We have recommended to the Senate that we drop the Bill,” Kerrow told the press shortly after the committee adjourned.

June 15 is the last day for the 11th Parliament as it adjourns sine die (indefinitely). The stand-off means that it may require another parliament – after the elections - to attempt to pass the Bill.

This a tall order, as admitted by Mr Kerrow, and is likely to throw counties into a financial crisis that may see crucial services such as health plunge into a mess.

“If the Senate approves our decision tomorrow (today), then it (the Bill) goes back to mediation. But personally I don’t believe anyone in the Senate has the appetite for mediation. We went through that before,” said Kerrow.

An endorsement of the committee’s decision by the Senate seating today will mean that the Bill will lapse and, therefore, there will be no allocation of revenue to the counties.

Such a scenario, Kerrow says, will mean that the national government will have to find a way of bailing out the county governments.

Revenue Bill

“What are the options? I don’t know. That’s their (national government) headache. They will have to find money and mechanisms to give it out,” he said.

Both houses of Parliament must pass the Division of Revenue Bill and the President assent to it if counties are to get any money from the national kitty from July 1.

The Senate committee has endorsed the proposalof the Commission on Revenue Allocation (CRA) that counties be given Sh314 billion, but Treasury has proposed Sh299 billion.

The National Assembly reduced the sum to Sh291 billion.