Governors reject Treasury's new revenue sharing plan for regions

Council of governors led by chairperson Anne Waiguru during a press briefing on December 5, 2022. [Wilberforce Okwiri, Standard]

Governors have opposed the National Treasury's proposed shareable revenue disbursement formula where counties will receive allocations according to their rates of absorption.

The Council of Governors (COG) has termed the proposal illegal and unacceptable.

CoG, through its Finance, Planning, and Economic Affairs committee chairman Fernandes Barasa, maintained that shareable revenue should be disbursed to counties on a monthly basis as required by the law.

Barasa, who is also the governor of Kakamega, said: "It is improper for the National Treasury to suggest that the disbursements be done based on the rate of absorption as this is in contravention of the constitution."

"The constitution is clear about how often the funds should be released to the counties. The current delays in the release of the cash has started crippling operations across the devolved units," said the governor.

Barasa, who spoke in Matungu constituency on Thursday, urged the National Treasury to fast-track the release of the funds saying the delay has affected service delivery.

The governor said delayed requisition approvals by the Controller of Budget have made it hard for counties to absorb funds released to counties.

"Counties have so far received just Sh122.1 billion, being disbursements for June, July, August, and September. We are in arrears of Sh90.65b for October, November, and December," Barasa said.

The National Treasury had proposed that it should give counties funds based on absorption rates and how they spend the funds.

The balances in different county revenue funds are a result of under-absorption where some counties did not use all money in their financial year, according to the National Treasury.

Mr Barasa wondered why there are no delays in the disbursement of cash to fund national government functions lamenting that counties are being subjected to unprecedented delays.

"We face erratic disbursement of shareable revenue unlike the national government, yet we are serving the same people. We demand the immediate release of funds to counties," he said.

Siaya Governor James Orengo, who was present, lamented that county governments are struggling to run their programmes due to delays in disbursing funds by the Treasury.

"Governors will join hands to push for the release of the funds. I have just shared with governor Barasa the challenges we are facing in Siaya due to lack of money, where we are being forced to look for alternative ways of managing the county government operations," said Orengo.

Kakamega receives at least Sh15 billion from the exchequer as its shareable revenue.

Mr Barasa said the county has been collecting about Sh1.2 billion in local revenues each financial year which is below the Sh5 billion target.

He attributed his administration's inability to hit its target to loopholes that lead to the loss of revenue, including corruption of some individuals at the Kakamega Revenue Agency.

The governor has directed that revenue payments be cashless and all systems automated to help seal the loopholes.