Dispute looms over sharing of county billions
The two levels of government are set for a major dispute over equitable cash sharing to counties.
While on Division of Revenue, the Commission of Revenue Allocation (CRA) recommended Sh398.14 billion, the National Treasury proposed Sh391.1 billion while the Council of Governors proposed Sh439.5 billion as equitable share to counties for the Financial Year 2024/25.
There was no consensus on the Division of Revenue during yesterday’s Intergovernmental Budget and Economic Council (IBEC) chaired by Deputy President Rigathi Gachagua.
It was, however, resolved that a committee comprising CoG, Commission of Revenue Allocation, National Treasury and the Intergovernmental Budget and Economic Council (IBEC) be constituted to examine the equitable sharable revenue proposals and conclude within a week.
“Counties that have evaluated and verified their pending bills can process payments without reference to the Office of the Auditor General, an independent constitutional institution,” the meeting resolved.
Also, during the meeting, the following fiscal documents were presented, including the Budget Policy Documents, Budget Policy Statement (2024), Medium-Term Debt Strategy (2024), the Division of Revenue Bill for 2024/25 Financial Year, County Allocation of Revenue Bill and County Government Additional Allocation Bill 2024/25.
Arising from the deliberations, it was agreed that on the Medical Equipment Service Programme, counties will engage directly with service providers and negotiate new contractual arrangements.
The National Treasury has committed to clear December 2023 disbursements to counties of sharable revenue within two weeks from yesterday.
It was agreed that priority be given to counties that had not received an allocation in January 2024.
During this meeting, it was noted that the National Treasury has as of January 24, 2024, disbursed a total of Sh160 billion which translates to 41.5 per cent of the total equitable share of Sh385.4 billion due to county government this Financial Year 2023/24.
However, the National Treasury is yet to disburse December 2023 and January 2024 allocations amounting to Sh63.59 billion.
“Additionally, we noted that there has been a delay in releasing the county governments’ additional allocations for the financial year 2023/24 amounting to Sh53 billion being loans and grants because Parliament is yet to enact the necessary legislation.
Mediation process
We, therefore, urge Parliament to fast-track the ongoing mediation process,” the statement.
On pending bills, both levels of government said they were committed to settling dues to facilitate circulation of funds in the economy.
The meeting heard that as at June 30 2023, counties stock of pending bills was stood at Sh164.8 billion of which Sh107 billion (or 65 per cent) was owed by Nairobi alone.
The IBEC noted that at the National level, a framework for the resolution of pending bills was being implemented through a pending bills verification committee.
The council urged counties to adopt a similar framework as that of the National government to address and resolve the persistent issue of Pending Bills. The delayed payments are negatively affecting businesses and the economy.
IBEC, however, said it was concerned that counties were lagging in their own source revenue collection.
The council further noted that the Kenya Revenue Authority has not met the revenue collection targets for the last two quarters with the deficit amounting to approximately Sh200 billion.
“This has affected their ability to settle pending bills and enhance service delivery- including economic development at both levels of government,” the council noted.
IBEC also revealed that collaboration is ongoing in mining activities and strengthening the agricultural and livestock value chains in particular- sugar, dairy, potatoes subsector reforms.
A report by the Office of the Controller of Budget, reveals that some 24 counties are yet to receive disbursements for November.
None of the 47 devolved units has received a penny for December and January.
Treasury last released on December 29, 2023. Some Sh4.91 billion were released to seven counties to cater for the month of November.
Before that, the National Treasury had released some Sh17.13 billion to some 16 counties. Out of the amount, some Sh6.77 billion was used to clear balances for October and Sh10.36 billion went to some 16 counties for November.