Several county governments will receive at least Sh19.7 million cumulatively in the next 2024/25 financial year (FY) as cash generated from court fines and penalties linked to violation of county legislations. This points to the additional flow of revenues for the devolved units, which have been pushing for the sharing of such funds, alongside mineral royalties, to form part of the County Revenue Fund.

It will be the second fiscal year that the county governments will be receiving proceeds of court fines since the adoption of the Intergovernmental Budget and Economic Council (IBEC) recommendations in May 2022. In the draft Budget Policy Statement (BPS) 2024, National Treasury disclosed the Judiciary has already collected the Sh19.7 million court fines and has been directed to facilitate the transfer of the funds in the budget cycle commencing July 2024.

The amount is made up of Sh7.4 million that the Judiciary collected in the previous 2022/23 FY and Sh12.3 million under the current budget. The court fine collections are, however, likely to be more than Sh19.7 million by the end of June 2024, given many pending court cases at the moment and the current fiscal year is just midway.

“For FY 2024/25, the Judiciary has provided a schedule indicating the revenue collected in FY 2022/23 was Ksh7.4 million and Ksh12.3 million for FY 2023/24. The Judiciary is called upon to budget this amount as a transfer to the County Governments to enable it to be transferred in the FY 20224/25,” Treasury says in the BPS 2024.

IBEC had, in its 2022 report, indicated that the funds raised from contravention of county legislation were being retained by the Judiciary and transferred to the National Treasury, stopping the units from benefiting from their own laws. As such, a framework for sharing these funds was recommended and first adopted in the current 2023/24 budget, where 10 counties got a total of Sh108.7 million in court fines. The amount consisted of court fines raised in the financial years of 2019/20, 2020/21, and 2021/22.

County Revenue Fund

It, therefore, implies that court fines and penalties will be payable to the County Revenue Fund, successfully excluding  them from the consolidated funds that keep all the government revenues.

“Going forward, the National Treasury has proposed that these revenues be captured in the annual County Governments Additional Allocations Bill to enable its disbursement to the relevant County Governments as tabulated by the Judiciary,”

Treasury says. The court fines and mineral royalties are expected to supplement county governments’ coffers at a time when they are battling a cash crunch owing to delays in exchequer release while Own-Source Revenues (OSR) are falling short of targets.

Many counties still do not have a robust economic base that can generate enough taxes, while the lack of an automated revenue collection system has also promoted tax leaks, leaving them dependent on the central government, which is relatively efficient in mobilisation. Out of the 47 counties, only four – Lamu, Kitui, Homa Bay, and Baringo – achieved OSR targets in the last 2022/23 budget cycle.

The State Department of Mining is also required to forward to the Treasury a framework for sharing the 20 per cent share of mineral royalties among the County Governments for inclusion in the annual County Governments Additional Allocations Bill. “The National Government is committed to ensuring that the mineral royalties due to the respective County Governments and communities in line with the Mining Act, 2016 are disbursed,” says Treasury.