Controller of Budget declines to approve county's Sh4.7b budget

Vihiga Governor Moses Akaranga. In a letter addressed to the governor dated August 30, 2016, and signed by Controller of Budget Agnes Odhiambo, the county was restricted from withdrawing from public funds. (PHOTO: COURTESY)

The county government may be headed for a cash crunch after the Controller of Budget declined to approve its Sh4.7 billion budget estimates for the 2016-2017 financial year due to anomalies.

In a letter addressed to Governor Moses Akaranga dated August 30, 2016, and signed by Controller of Budget Agnes Odhiambo, the county was restricted from withdrawing from public funds.

The letter notes with concern that approved budget allocations for some departments vary from the ceilings set and the differences have not been appropriately explained in line with the law.

"Section 12 of the Second Schedule of the Public Finance Management (PFM) Act 2012 requires county governments to implement Programme Based Budget (PBB) from FY 2014/15. The PBB approach links available resources to achievement of set objectives and outcomes. The submitted Approved Budget for FY 2015/16 did not fully adopt the PBB framework," a section of the letter read.

Ms Odhiambo noted that PBB for some departments did not contain programme objectives, key outputs and key performance indicators and, therefore, lacked details on criteria for measuring outputs and expected outcomes. It further observed that the county's local revenue target was unrealistic based on historical trends and should be revised to avoid a hidden budget deficit.

"For FY 2016/17 the county has set to collect Sh220 million compared to Sh123 million collected in FY 2013/14, Sh115 million in FY 2014/15 and Sh138 million in FY 2015-16," the letter reads.

Odhiambo advised the county assembly to ensure that the budget complied with the law as personnel emoluments should not have exceeded Sh508.8 million, yet the budget was Sh613.77 million, exceeding the allowed limit.

She further noted the county government projected to spend 39.6 per cent of its total revenue on wages and benefits, which is above the ceiling provided for by the law.

"The PFM (County Governments) Regulation 2015 sets a limit on county governments' expenditure on wages and benefits at 35 per cent of the county's total revenue. A review of the budget indicates that personnel emoluments amount to Sh1.87 billion, translating to 39.6 per cent of the total revenue," the letter read.

A total of Sh364 million was allocated for items identified in the budget estimates included under development allocation, but which appear recurrent in expenditure. A further Sh200.74 million was allocated under the County Treasury for development. The Controller of Budget noted that the department may not have adequate capacity to implement projects.

"The approved budget estimates contain an allocation to Elderly Fund of Sh75 million. We advise that establishment of any county fund should be in accordance with the PFM Act, 2012. The fund must be operationalised by regulations prior to operationalisation of the fund," the letter read.

The county further failed to set up an Emergency Fund of up to 2 per cent of its last audited revenue to cater for unforeseen occurrences.