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Counties face cash crisis as MPs, senators differ over Bill

By Roselyne Obala | June 13th 2019
Council of Governors Chairman Wycliffe Oparanya.

Today is the deadline for MPs to hammer a compromise on a money legislation, failure to which counties will be plunged into a cash crisis that will affect salaries of employees and disrupt services.

Should the Division of Revenue Bill, 2019, collapse, Treasury could advance funds for recurrent expenditure only to keep the counties running, but governors have vowed to reject the stop-gap measure.

Mediation talks on the Bill have deadlocked, with representatives of members of the National Assembly and senators holding the final meeting today to try to resolve the dispute on the legislation on sharing revenue between the national and county governments.

Point of departure

But sources within Parliament have confided to The Standard that possibility of a deal are remote as both the National Assembly and Senate representatives in the mediation talks have taken hardline positions.

“It is going to collapse,” said a member of the mediation committee, referring to chances of reaching a compromise version of the Bill.

The point of departure is the proposed additional Sh20 billion to counties by the Senate in the next budget which the National Assembly rejected.

The senators also want the controversial multi-billion medical leasing equipment programme halted, which will see the Sh6.2 billion allocation suspended.

Majority Leader Aden Duale (Garissa Township) said the committee has been advised by the budget office on the likely effects if the mediation talks stall.

“If the current process fails to bear fruit within the stipulated time-frame, the Bill stands defeated and can be reintroduced in the National Assembly afresh,” he stated.

He continued: “In such circumstances, the Speaker may have to waive the six months window for reintroduction of the Bill that was initially defeated.”

This is not the first time Parliament is facing a similar quagmire as it happened in 2017.

In absence of the law, the National Treasury could advance cash to county governments as an administrative tool to prevent county operations grinding to a halt. This happened in 2017.

But the Council of Governors has vowed it will reject such stop-gap measures and that it will not accept money for salaries only.

“Is there any greater right in this nation than the right to health services, clean drinking water, to a clean environment, inter alia, for a citizen? So how can MPs ignore this dire need and vote for payment of salaries at the expense of the needs of wananchi?” CoG chairman Wycliffe Oparanya (Kakamega) posed.

“We must state that if mediation fails, county governments will decline to receive salaries’ monies from government. We cannot be so insensitive to the desires of our citizens who overwhelmingly arri voted for devolution,” Oparanya said from Moscow.

“We are aware that Thursday is the deadline for this process,” said the chair in reference to the 30 days legal deadline to conclude the talks.

He continued: “For county governments, the bigger picture is that we are headed to a halt where services are significantly going to be affected.”

2019/20 budgets

Without the law, there would be no basis of sharing out national revenue between the two levels of government.

In turn, a stalemate on the Bill, would stall the County Allocation of Revenue Bill, which guides division of funds among the 47 counties, hence the devolved units would have no money to finance their 2019/20 budgets.

Senators’ decision to increase counties vote from Sh371.6 billion to Sh391.6 billion, with Sh335.7 billion as equitable share instead of Sh310 billion in line with National Treasury proposal, was overturned by the National Assembly.

Senate Minority Leader Mutula Kilonzo Jnr (Makueni), who is also a member of the mediation committee, said the deliberations seek to establish the reasons for the deductions to counties and ensure counties are properly funded.

“We are left with one issue to sort – shareable revenue,” said Kilonzo Jnr, explaining the final figure is still contested.

Majority Whip Susan Kihika (Nakuru) stated that they are still progressing with the talks.

“We do have a meeting on Thursday (today) and hopefully, we will have white smoke then,” she said.

Kikuyu MP Kimani Ichungwa, who co-chairs the mediation committee together with Mandera Senator Mohamed Mohamud, downplayed any concerns, saying the talks will go on till today morning.

On Tuesday, there was a flurry of activity in Parliament, which also saw the House leadership led by the speakers try to unlock the stalemate to forestall a financial crisis in government.

According to the Bill passed by the National Assembly and rejected by the Senate, counties equitable share was pegged at Sh310 billion. However, the County Allocation of Revenue Bill, 2019, proposal is based on Sh335 billion proposed by Commission of Revenue Allocation (CRA).

The counties will also receive conditional allocation of Sh22.9 billion and loans and Sh38.7 billion grants.

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