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How delay in passing crucial Bills constrains county budgets

COUNTIES
By Stephen Makabila | May 4th 2014

By Stephen Makabila

Kenya: Delay in passing two crucial Bills by the National Assembly and the Senate has constrained the 47 county governments from coming up with clear budgetary figures for the 2014/2015 financial year. The Division of Revenue Bill and the County Revenue Allocation Bill have to be passed by the National Assembly and the Senate respectively.

While the National Assembly has played its part and passed the Division of Revenue Bill and forwarded it to the Senate, the Senate, which has to make some input and return the same to Parliament for approval, is on recess.

Some counties have consequently had their budget proposals presented to their respective county assemblies for approval, but they are still waiting for the two Bills to be passed by the two Houses for them to adjust figures in the budgets either upwards or down-wards.

In making county budgetary proposals, the counties are now using estimates of the revenue they can generate locally and the Sh226 billion proposed for allocation to county governments by the National Assembly two weeks back.

“The two Houses need to pass the two Bills quickly for counties to develop their budgets using the right figures,” Machakos County Governor Alfred Mutua told The Standard on Sunday.

The Public Finance Management Act had put a deadline of April 30 for tabling of the estimates by counties. The budget making process in the counties involves public consultations from the sub-location level, budget committee sessions, approval by the county executive committee and presentation to the county assembly for another approval, where members of the county assembly may make adjustments.

The public has to be involved through the County Budget and Economic Forums.

Budget estimates

The Nairobi County Government, for example, last week tabled its budget estimates for the 2014/2015 financial year, with Finance Executive Gregory Mwakanongo reading the Sh28.6 billion proposal.

Mwakanongo said the National Government would finance the County Government with Sh11 billion. In the estimates, debt serving will take 7.85 per cent, salaries 42.81 per cent, operations 18.21 per cent and development 30.17 per cent. He said recurrent expenditure is projected at Sh20.7 billion.

Dr Mutua says Machakos County has a Sh8.4 billion budget proposal, with 40 per cent of it going to recurrent expenditure and 60 per cent to development.

“The budget has been presented to the County Assembly for approval and it is supposed to be ready by end of May. We have prioritised infrastructure, water development and food security this time round,” said Dr Mutua.

Majority leader in the National Assembly Aden Duale told The Standard on Sunday the two Bills were crucial for budget making process at the counties.

“They (Bills) have to be passed to enable county governments prepare their budgets for 2014/2015,” ahe dded.

Duale said the Senate has only to deal with the Division of Revenue Bill originating from National Assembly and not any coming from the Senate.

“We are through with the First and Second Reading and the Senate will receive the Bill, which they have to deal with, and if they have any amendments it has to be returned to the National Assembly for approval,” he said.

Duale says it is only the County Revenue Allocation Bill, which has to originate from Senate, but the National Assembly is yet to receive it.

Senate Finance Committee chairman and Mandera County Senator Billow Kerrow says the Division of Revenue Bill was discussed by his Committee on Wednesday.

“The Senate is on recess, but there are plans to recall it to discuss the Bill. After that we will handle the County Revenue Allocation Bill,” Kerrow said on telephone.

Many feel that if the two Bills were to be passed in good time, mistakes of the last financial year could be avoided. During the 2013/2014 financial year, the National Treasury withheld Sh7.8 billion for 21 counties, which failed to draw up proper budgets. Some of the counties presented budgets full of pipe dreams about the money they expected to make, or had big holes because of wanting to live beyond their means.

The Controller of Budget, Agnes Odhiambo, had then noted that the constraints some counties faced in meeting the set standards included failure to pass the county governments Finance Bills.

While the counties have to generate their own revenue to supplement what they receive from the National Government, most have also been at loggerheads with the public over over-taxation.

Lack of awareness

A study commissioned by the National Taxpayers Association indicates that the opposition to the tax measures stems from the fact that the county governments did not fully consult the public before passing the measures.

The study showed lack of awareness among those targeted by new taxes in the counties was shocking, with only 34 per cent of residents surveyed having any clue as to the nature and purpose of the new measures.

It further recommended that it may be wise for the Commission on Revenue Allocation, Transition Authority, Controller of Budget, the Treasury and the county governments to work together using tried and tested models that counties can adapt for developing their budgets. 

A committee of former MPs that has been training members of the county assemblies and county executives on the budget making process, also notes budget making remains a major challenge in most counties.

The committee is led by former Kinangop MP Patrick Ngugi, with former Limuru MP George Nyanja and Eldoret East MP Prof Margaret Kamar being among the members.

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