These are gloomy times for the devolved government system. Devolution, which sought to dismantle the old centralised governance, has been under constant attack since inception, and only the courts have given life to the Constitution in favour of counties.
With that in mind, some critical issues in the current imbroglio over the Division of Revenue Bill ought to be resolved by the courts. This Bill allocates the two levels of government revenue to budget and expand.
Over the years, there has been contention on the revenue to be allocated to both levels of government. The Commission on Revenue Allocation (CRA), which is constitutionally mandated to make recommendations on the sharing of revenue between the two levels of government, has had its proposals for county allocations consistently reduced by the National Assembly.
Unlike the Senate, the latter has always adopted the National Treasury proposals, which always tend to be grossly lower than the CRA proposals. This year has been no different and the National Treasury and the National Assembly have proposed to lower the county governments allocations to even lower than 2018.
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Meanwhile, the national government allocations continue to balloon. In the absence of agreement, the law requires that parties mediate, but strangely, the mediation is by the same two bodies that couldn’t agree, without a third party. No wonder agreement is always difficult.
The challenge with the lack of agreement is that the end of the financial year comes without an appropriate mechanism for counties to budget and appropriate money since their budgets are based on the Division of Revenue Bill allocations. Interestingly, no one has ever really questioned why the national government budgets and appropriates for itself money without a formal allocation of revenue through the Division of Revenue Bill.
To my mind, if the Division of Revenue Bill is not passed by the end of June, none of the two levels of government can proceed with appropriation in the new financial year. If, on the other hand, the national government can spend money without passage of Division of Revenue Bill, then the county governments should, too.
The habit of punishing county governments alone for acts that are unrelated to them is injurious to devolution and must cease. The courts must resolve the issue once and for all. My only worry about the courts is that sometimes, like in a recent ruling, a fundamental misunderstanding by the courts of public finance management issues can lead to absurdity.
The case in point regarded the respective rights of the county assemblies and the Senate in the oversight of the county executive. The constitutional provisions on this question have always been contested because, while the county assemblies exist primarily to exercise oversight over the county executive, the Senate is also given constitutional powers to exercise oversight over the county revenue.
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Was the intention of the Constitution to have a duplicated oversight process? In the court’s view, the county assemblies can only exercise oversight over the revenue collected in the counties, while the Senate oversights nationally allocated revenue.
The problem is that county monies are not spent on the basis of source. All revenue received, whether raised locally or allocated, is credited into the County Revenue Fund and spent from there.
There is no way to determine which project was funded from which source. The Auditor General does not make this distinction in his report either, thus making the court’s proposal impractical. Secondly, due to limited sources of revenue and the politics of revenue raising, most counties fund less than 10 per cent of their budget from locally sourced revenue.
In many rural counties, it is less than five per cent. Essentially, MCAs will only be responsible for oversight of five per cent of the budget.
This cannot have been the intent of the Constitution. While the courts are much needed arbiters in these severely contested issues, a lack of appreciation of the dynamics that inform the issues in contention can lead to disastrous results. That must be avoided at all costs.
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-The writer is an advocate of the High Court.