Counties delaying salaries yet have surplus cash, Treasury says

The Treasury and county governments engaged in a war of words over the pace of flow of cash to the counties.

While governors claimed that the Government was deliberating delaying release of money to sabotage devolution, the Treasury Sunday accused some county governments of having huge amounts of funds lying idle in their bank accounts while claiming they cannot pay salaries to their workers.

This comes after governors had accused the national government and Treasury of delaying disbursements of funds; plunging counties into salary crisis.

They termed the delays a direct sabotage of devolution to make counties seem unable to pay salaries and deliver services.

Governors argued the national treasury has continued to ignore the provisions of the Constitution and the Public Finance Management Act, 2012 by releasing money irregularly to counties, leading to "poor cash flow planning at the county governments and therefore hampering absorption of the said funds"

But in a statement Sunday, Treasury Principal Secretary Kamau Thugge claimed county funds are not only disbursed in time but also counties have 'significant balances' of unused funds lying at the Central Bank. He noted that funds should be able to pay off salaries comfortably.

According to the figures released for May this year by the PS, the counties with the highest bank balances reportedly lying idle at CBK include Lamu Sh783 million, Kitui Sh1.8 billion , Turkana Sh2.2 billion Siaya Sh1.2 billion and Embu 868 million.

Those with the least balances were Vihiga, Nairobi, Machakos (one per cent each),Kiambu Sh128 million, Nyeri Sh188 million and Taita-Taveta 183 million.

"Some of the counties that are alleged to have encountered difficulties in paying salaries had significant balances in their accounts at CBK sufficient to pay salaries," he said.

He added: "Failure by counties to pay salaries of staff including health workers is not due to delayed disbursements fromTreasury."

Public backlash

Dr Thugge said that as at June 16, this year, counties were collectively holding unspent bank balances amounting to Sh31.3 billion. He added that throughout the year, the unspent amounts ranged between Sh30 billion and Sh40 billion.

The PS said while disbursing funds to the counties in any month, priority is given to those with the least fund balances in their bank accounts in order to ensure services are not disrupted. He said by leaving significant balances lying idle at CBK, county governments are increasing the costs of borrowing and interest repayments for the national government.

He called on counties to regularly update Kenyans on the amounts they receive from Treasury, saying it is required by law

The PS said as at June 16, Sh196.9 billion or 86 per cent of the disbursements due to counties for the 2014/2015 had been released. However, it is not clear why the rest of the funds that were due to the county governments in the last financial year had not been released by that time.

But the Council of Governors (CoG) accused the Government of delaying to release the funds to counties in order to capitalise on their poor absorption to trigger a public backlash

CoG Chairman Peter Munya explained that county governments will not be able to access the funds for May and June because the Treasury was supposed to have released the monies not later than April 15. He added that to date, counties have only received money up to April.