Governors reject revenue Bill, demand Sh439.5 billion allocation

Health CS Susan Nakhumicha, Head of Public Service Felix Koskei and Council of Governors Chairperson Anne Waiguru addressing the media at KICC, Nairobi on April 23, 2024. [Boniface Okendo, Standard]

The Council of Governors (CoG) has told the Senate that the 47 counties will face major challenges in the delivery of the functions assigned to them under the Fourth Schedule of the Constitution if the Division of Revenue Allocation Bill is passed as it is. 

CoG Chairperson Anne Waiguru who led  five governors who appeared before the Senate Finance Committee said they are concerned over the proposed allocation of Sh391.1 billion as an equitable share of revenue to counties as contained in the Division of Revenue Bill. 

Governors; Fernandes Barasa (Kakamega), Muthomi Njuki (Tharaka Nithi), Mutahi Kahiga (Nyeri), Andrew Mwadime (Taita Taveta) joined Waiguru in pushing for the minimum allocation of Sh439.5 billion for Financial year 2024/25 as shareable revenue and urged the Senate to support the counties to receive the same. 

“In addition to the projected economic growth, the county governments have been subjected to additional non-discretionary expenditures that will require increased allocation in the next Financial Year, the Council of Governors therefore proposes the allocation of Sh439.5 billion for the Financial Year 2024/25 as shareable revenue,” said the CoG chair. 

The Kirinyaga governor appreciated the Senate’s renewed commitment to support the county governments through advocating for increased allocation citing recommendation in  the 2024 Budget Policy Statement to allocate counties Sh415.9 billion for the Financial Year 2024/25. 

Waiguru told the Senate Finance Committee that the County Aggregation and Industrial Parks are being implemented jointly by the national and county governments on a 50:50 matching basis, with counties therefore required to allocate Sh11.75 billion from their budgets. 

Njuki told the committee chaired by Mandera Governor Ali Roba that the National Assembly proposal for counties to get Sh391 billion as shareable revenue was inadequate bearing in mind there is a collective bargaining agreement signed with doctors in 2017. 

“The shareable revenue allocation of Sh439.5 billion that we are asking for is to ensure that counties are able to provide basic services, the Constitution provides that we have counties getting sufficient revenue allocation to cater for the devolved functions,” he said. 

The Tharaka Nithi governor who chairs the CoG Health Committee explained that the last allocation to the Medical Equipment Service programme amounted to Sh5.85 billion, this being the maintenance and servicing costs with counties expected to acquire and install new machines as well as take up the cost of MRI and CT Scan machines from the next financial year from their budgets. 

He noted that the Community Health Promoters programme is being implemented on a matching basis of 50:50 between the two levels of government requiring an additional contribution as stipends of at least Sh 3.2 billion in the next financial year. 

Barasa who is the CoG Finance Committee Chairperson said the housing levy deductions increased counties expenditure by a minimum of approximately Sh4 billion while the New National Social Security Fund deductions will cost the counties an additional Sh3 billion.

“The implementation of the doctors Collective Bargaining Agreement upon payment of arrears is estimated at Sh5.8 billion and needs to be factored in by counties in the budgets saying that without that it would be difficult to implement it,” he said. 

Roba warned governors against committing themselves to political statements with financial implications citing the contribution of 50 per cent of funds required for the construction of counties Industrial park yet they did not have the monies. 

Kakamega Senator Boni Khalwale accused governors of letting senators down whenever they push for additional allocation to counties and wondered what the CoG has gained from Inter Budgetary Economic Council meetings held regularly. 

Kisii Senator Richard Onyonka wondered why the National Treasury delays disbursing funds to counties and called for a separate account for the devolved units to ensure efficiency. 

Mombasa Senator Mohammed Faki assured that the Senate was ready to champion the interests of counties and asked governors to be ready to keep their side of their bargain by ensuring prudent expenditure of funds. 

The Commission on Revenue Allocation in submissions done to the Senate pointed out that the allocation to county governments in Division of Revenue Allocation Bill, 2024 of Sh391 billion translates to an increment of Sh16.6 billion from the adjusted equitable share of Sh374.5 billion in the previous financial year. 

“The Commission on Revenue Allocation is cognisant of other competing interests of national government such as debt service obligations and containment of the fiscal deficit. It is necessary both levels of governments are adequately financed to ensure they are able to perform the functions allocated to them,” said the CRA report.

This is equivalent to a 4.3 per cent growth in shareable revenue for the FY 2024/25 to the county governments.

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