Reduction of funds allocation to counties betrays devolution

The standoff between the National Assembly and the Senate on quantum of revenue that should be allocated to counties is not just unfortunate but grossly inconsiderate. In the short history of our devolution system, we have had several standoffs between these two Houses on this question but most have been resolved in good time to allow counties to prepare their budgets in time.

We are now past the April 30 by which time counties should have prepared their budgets. What figures should they use as their revenue base? The Constitution had arranged the process in a manner that not only reduced contestation but was also concluded early enough to avoid inconveniencing counties in their budget process. As early as December, the Commission for Revenue Allocation (CRA), mandated to advise on sharing of revenue between the two levels of government, would have made its proposals and passed them to Parliament for further consultations and final decision.

The CRA, makes its recommendations after reviewing all aspects that inform the allocation of revenue. These include our revenue inflows from taxes and other charges and levies, donor grants and our borrowing. They also consider our “committed” expenditure which include direct charges on the consolidated fund, our debt repayment obligations and public service salaries at the national level.

The CRA is also required to take into account other “national interest” expenditures, the definition of which still remains fluid, but may include expenditure we have committed to as part of an agreed national development agenda and national security. Once the CRA has assessed all these issues and consulted primarily with the Treasury and the Council of Governors (CoG), they then make recommendations on what quantum of money should be allocated to each level of government.

The logical assumption is there would be little or no variation from CRA proposals. It makes little sense to create an entire constitutional commission, load it with well remunerated commissioners from various shades of political and ideological opinion, fill it with fiscal experts, and then treat their proposal as just any other view. But that is precisely what happens. Once CRA makes its proposals the same are subjected to discussions between both levels of government at the Intergovernmental Budget and Economic Council (IBEC).

The IBEC, which is chaired by the Deputy President includes the critical representatives of both levels of government including the Treasury and the CoG. The IBEC proposals are then sent to Parliament for final decision. Our constitutional structure requires that the final determination be agreed upon between the two Houses of Parliament. All these processes take time and leave the counties unclear on what to budget on the basis of.

What has compounded the problem is the standoff between the National Assembly which has rejected Senate’s proposals and adopted the National government position as gospel thus reducing the allocation to counties by well over Sh9 billion. For the first time, counties would be allocated lesser monies than previous years. Meanwhile our other budget allocations at national level continue to grow. Our current total budget outlay is Sh2.7 trillion out of which the counties’ allocation is just slightly over Sh300 billion, a minuscule proportion of the national budget. Yet the responsibilities given to counties including health, infrastructure, early childhood education, agriculture, and water go to the very heart of what impacts wananchi’s well being. 

It makes no sense that reductions in revenue inflows and over commitment on debt repayment, which appears to be the reason for reduced allocations to counties, should prejudice county governments yet the decisions on borrowing and taxation lie entirely at the pleasure of the National government. It is therefore at this level that any reductions in revenue should apply, if for no other reason to tame expenditure appetites. Anything less would be a betrayal of devolution, which, despite it’s challenges, is one of the few remaining hopes for citizens’ economic empowerment.

- The writer is an Advocate of the High Court of Kenya