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Governors yesterdaay told off the Commission on Revenue Allocation (CRA) and Controller of Budget (COB) over their projections on county own source revenue.

In his submissions to the Senate Public Accounts Committee (PAC), Nyeri Governor Mutahi Kahiga said that all the 47 counties are struggling to meet even their own projections, adding that in the event that a governor manages to meet the target, he will be out of office.

Kahiga told the Homa Bay Senator Moses Kajwang’ led committee that it is impossible to meet the projected own source revenues.

According to a report by the CRA on Comprehensive Own Source Revenue Potential and Tax Gap, a study of County Governments shows that analysis of total revenues that each County Government can generate from all available sources suggests that the total annual revenue potential across counties is around Sh93billion.

According to audited data on actual revenue collections, the counties generated around Sh38billion annually on average from own sources over the last three financial years (2017/18, 2018/19, and 2019/20), with the remaining Sh55billion being unrealized.

“The projections being given by CRA and Controller of Budget are impossible and untenable. Governors have to balance of politics and development. It is impractical to meet those targets,” said Kahiga.

He went on: “It will be difficult to achieve. Every governor must balance political interest and the funds available. COB gave us a proposal that we can collect Sh2.6billion annually. You will collect that money but that will be the last time you will be the governor.”

Yesterday, Kahiga told the committee that Nyeri County has for the last three financial years set a target of collecting Sh1billion but is always falling short to less than Sh700million.

The Auditor General’s Report on Nyeri County for the year ending June 30, 2020, states that it was projected to collect Sh1billion in the 2019-2020 financial year but ended up collecting a paltry Sh664.5 million, a situation replicated in all other counties.

According to the County Chief, Nyeri County enacted a law that allows all money collected from all other revenue streams apart from the Hospitals which is using its own revenue to fund its services.

 “We have a system that allows collecting money on our own source revenue from all the streams except the hospitals. Money from Hospitals does not go to other areas. This idea of always looking at National government and Treasury should be looked at,” he said.

He further charged that the National Treasury has projected to raise Sh374 billion in the next financial year. Yet, no one is explaining the scientific study on the increase and how it is going to be divided between the National and County governments.

Already the National government through Deputy President Rigathi Gachagua has insisted that they will only make available Sh380 billion for the County government in the next financial year.

This is against the proposal by CRA that the devolved units should share Sh407billion while the County chiefs insist that based on their projections, they should share Sh425billion.

This even as Senators cautioned Governors from over-estimating their source revenue collection due to perennial failure to meet the target.

Led by Nyandarua Senator John Methu (Nyandarua), and Okiya Omtatah (Busia), the Senators said over-estimation is what is leading to high pending bills in the Counties.

“All Counties are overestimating their revenue collection. The more things change the more they remain the same. This is not prudent management of resources,” said Methu.

The committee also took issue with the governor for spending way beyond the limit on personnel emoluments which stood at 52 percent in the financial year under review.

The Auditor in her report stated the examination of revenue and expenditure records indicated that compensation of employee’s expenditure for the year under review totaled Sh3,592,854,332 equivalent to 52 percent of the revenue of the County Executive totaling Sh6,956,824,044.

The expenditure exceeded the threshold of 35 percent prescribed under Regulation 25 (1) (b) of the Public Finance Management (County Governments) Regulations, 2015.

“The high wage bill is an indication that most of the County’s resources are spent on staff salaries at the expense of development projects and thus impacting negatively on service delivery to the residents of Nyeri,” reads part of the report.

However, Governor Kahiga responded by saying that the increase in employee compensation was attributed to the fact that Nyeri County was formerly Provincial Headquarters and thus the County inherited most of the devolved officers from the National Government and most of them were in the higher grades.

According to Kahiga, the County also inherited all staff from the defunct Local Authorities like Nyeri Municipal Council, Karatina Municipal Council, Othaya Town Council, and Nyeri County Council.

“Though the County inherited those staff not all of them had the skills to assist the County to deliver its mandate compelling the County to fill those gaps where’s the inherited staff had to be retained.”

He further stated that engagement of Early Childhood Development Education (ECDE) Caregivers to achieve the mandate of the County Government as per the constitution on devolved units also increased the wage bill.

“The county had to undertake that mandate and hence increased the budget for salary emoluments. The salaries and Remuneration Commission did a review that was to be undertaken in three phases.  During the period under review, the 3rd phase was implemented affecting the wage bill since salary for staff was increased upwards.”

He further attributed the high increase in salaries to the recruitment of personnel to provide technical expertise, which could not be found in the already existing workforce, and hence the reason for continuous employment despite the ballooning wage bill.

And now Governor Kahiga has promised that his County Government will continue exploring all potential avenues geared towards managing the wage bill to the required ceiling.

End