Treasury released Sh50 billion to counties after President Uhuru Kenyatta assented to the Division of Revenue Bill 2019 yesterday.
This ends a three-month stalemate that had threatened to paralyse county operations.
Acting Treasury Cabinet Secretary Ukur Yatani said delays in passing the Division of Revenue Bill had adversely affected counties operations for the 2019-20 financial year.
“The delay has caused negative consequences of socio-economic activities countrywide as well as delivery of crucial public services like health,” he explained.
“The Sh50 billion entailed delayed disbursement for July and August, while the September disbursement will be done before the first of next month,” he added.
The law authorises Sh378.1 billion released to county governments for the 2019-20 financial year with Sh316.5 billion being equitable share and Sh61.1 billion as conditional allocation.
Mr Yatani asked governors to prioritise settlement of pending bills, with counties said to owe Sh100 billion as at February 2019, including payments for the supply of drugs from the Kenya Medical Supplies Agency (Kemsa), electricity and water payments among others.
“We want to urge the counties to finalise their budgets so that we can prioritise the settling of these bills to avoid further delays in delivery of goods and services,” he said.
“The National Treasury supports the initiative by parliament to amend the Public Finance Management Act to avoid such future occurrences,” the CS said.
Kenya Revenue Authority (KRA) Commissioner General James Mburu said the taxman has been looking forward to the disbursement so they can collect the outstanding tax payments owed by counties.
“We believe that this disbursement will enable us to pursue the county governments as well as suppliers to voluntarily remit their outstanding tax returns so that we can get our rightful share,” Mr Mburu said.
According to KRA data, counties owe more than Sh13 billion in monies deducted from employees as at August and this was hindering county staff from obtaining tax compliance certificates.
The Government has further launched a tax tribunal that has been given a three-month mandate to hear and adjudicate major tax disputes between the KRA and taxpayers.
“We have Sh260 billion tied up in the tax tribunal, which is a lot of money so should those cases be expedited, that money should enable us to meet our targets for this financial year,” he said.
There has been concern, however, that the Sh50 billion disbursement will mostly go towards paying county workers’ salaries after weeks of delay.
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