Treasury Cabinet Secretary Henry Rotich last week told senators that counties will have to face some austerity measures owing to revenue shortfalls by the taxman.
“We’ve had preliminary discussions with the governors to also institute austerity measures,” said CS Rotich, explaining that every government agency has to tighten its belt.
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This did not go down well with the county bosses who, through a statement by Council of Governors Chair Josephat Nanok accused Treasury of underfunding counties.
“Counties are facing a tight financial crisis as we have received 33 per cent of the expected 75 per cent of the equitable share for the current financial year,” said Nanok, the Turkana County Governor.
“Only three counties have surpassed 50 per cent of their total equitable share and the little disbursement we have received so far have gone towards payment of salaries and recurrent expenditure,” he said.
Nanok’s claims are partially true.
The latest Controller of Budget (CoB) report indicates that Treasury’s disbursement to the counties for the first quarter of the current financial year was significantly less than the amount disbursed in a similar period of the previous financial year.
“During the reporting period, the CoB authorised the withdrawal of Sh37.79 billion from the County Revenue Funds to the County Operational Accounts,” said the controller of budget in part. “This was a decline by 50.1 per cent from Sh75.69 billion released in a similar period of FY 2016/17.” This means that counties began the financial year already hard-pressed to meet operational costs even with additional disbursements from Treasury in the second quarter.
However devolved units on their part have been slow in increasing their own source revenue to fill shortfalls from the central government, with the CoB citing this as one of the challenges of balancing the books.
“The aggregate annual local revenue target for counties in FY 2017/18 is Sh55.92 billion,” explained the CoB, adding that county governments have only managed to generate Sh4.82 billion, a partly 8.6 per cent of this target and a 32 per cent decline compared to the previous reporting period.
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In addition to this, the CoB indicates that counties spent Sh27 billion of the sh35 billion disbursed over the first quarter in personnel emoluments and only Sh1 billion on development expenditure.
Other challenges to effective budget implementation cited by the CoB include IFMIS connectivity downtime, low expenditure on the development budget, and failure to budget for all revenue sources.
This means Treasury’s delays in disbursing the equitable share notwithstanding, counties bear a lot of responsibility in trimming waste allocation and boosting revenue collection.