Wetang'ula says revenue sharing formula stalemate to impact budget

President William Ruto assented to the Division of Revenue Bill 2023, (National Assembly Bill No. 9 of 2023) at State House, Nairobi, where counties will receive Sh385.4 billion for the 2023/2024 Financial Year. [PCS]

National Assembly Speaker Moses Wetangula, has warned that failure to resolve the revenue sharing formula stalemate for the 2024/25 Financial Year could jeopardise the budget cycle.

The Speaker called on the Council of Governors (CoG), the national government and Commission on Revenue Allocation (CRA) to urgently seek consensus on the matter.

With the governors seeking Sh450 billion, Wetang'ula wants a cost analysis of the transferred functions undertaken to know the cost of running counties.

This emerged at the close of the three-day Intergovernmental Relations Symposium in Naivasha that was organised by the Intergovernmental Relations Technical Committee (IGRTC).

In a speech read on his behalf by Ugenya MP David Ochieng, Wetangula lauded the ongoing talks chaired by the Deputy President Rigathi Gachagua with view of unlocking the impasse.

He said that the answer to unlocking the stalemate lay in addressing the governor's call for more funding vis-a-vis appreciating the tight fiscal space of the country.

In his speech, the Speaker noted that the disagreement on what should be the equitable share of revenue occurred nearly every year, adversely affecting county plans.

"A cost analysis of the transferred functions should be undertaken so that it is clear on what are the exact costs of running county governments," he said.

Wetangula noted that the CoG demands were based on the rising cost of inflation, high cost of running counties, enhanced NSSF contributions, the Social Health Insurance and the Housing Levy contributions.

"The national government is also experiencing reduced revenue growth coupled with huge expenditure incurred towards financing repayment of debts," he said.

He challenged counties to devise new ways of increasing own source of revenue to bridge the revenue gap saying that the current dispute was largely about financing of the counties.

The Speaker expressed concern over increased disputes between the two levels of government despite elaborate provisions of the law on dispute settlement mechanisms.

"Disputes between the two levels of government have often threatened to dilute the objects of devolution and always find their way in the courts of law," he said.

IGRTC Chairman Kithinji Kiragu, called for coordination and co-operation between the two levels of government to ensure seamless transfer of devolved functions.

He said that majority of the functions had already been devolved as per the Constitution and assured that committee would meet its set deadline for the remaining functions.

"The President has given us 60 days to make sure that all pending devolved functions are transferred to counties, and this shall be done by the end of March," he said.