Governors reject Sh391bn allocation approved by MPs
Council of Governors chairperson Anne Waiguru (centre) with her colleagues during a past media briefing in Nairobi.
Governors have rejected the Sh391.1 billion equitable revenue share approved by MPs, maintaining they will not take anything less than Sh439.5 billion.
The county chiefs said that they have been subjected to additional non-discretionary expenditures that will increase their cost of operations by more than Sh20 billion in the new financial year ending June 2025.
Appearing before the Senate Finance Committee on Tuesday, Council of Governors (CoG) Chairperson Anne Waiguru said counties are barely surviving due to huge wage bills and pending bills, with the former set to increase due to more taxation.
The Kirinyaga governor pointed out that the new housing levy deductions will increase county governments’ expenditures by at least Sh4 billion while the National Social Security Fund will cost an additional Sh3 billion.
Further, the new Social Health Insurance Fund contributions will require the devolved units to part with more money to pay for indigents.
The governors argued that the annual salary increments will also increase their expenditure, while the cost of implementing the doctors’ collective bargain agreement upon payment of arrears is estimated at Sh5.8 billion and needs to be factored in the next financial year.
“Counties will face major challenges in the performance of the functions assigned if the Senators pass the Division of Revenue Bill 2024 in its current form,” said Ms Waiguru. “Counties should get their rightful share of the shareable revenue. We are not asking for anything outside what is stipulated in the Constitution.”
According to the governors, the projected ordinary revenue is set to grow by 15 per cent, which represents a revenue increment of Sh376.9 billion from that which informed the sharing in the current financial year.
CoG Vice-Chairperson and Wajir Governor Ahmed Abdullahi accused the MPS of failing to take into consideration that counties have not been enjoying the proceeds of the Road Maintenance Levy Fund (RMLF).
“How do you give counties only Sh6 billion from an increase of Sh376 billion? This is just about 1 per cent increase to the counties, yet we have many functions that have been devolved. This is disproportionate and inequitable,” said Mr Abdullahi.
He added that by adjusting the base of the equitable share from Sh385.4 billion to Sh374.49 billion by deducting RMLF, the National Assembly erred in law and created a false impression that counties have been enjoying proceeds from the fund.
“RMLF being a fund collected separately from ordinary (shareable) revenue does not form an item under Division of Revenue,” he said.
Ms Waiguru told the committee that the erroneous adjustment of the baseline in the explanatory memorandum, specifically by deducting the RMLF and library services funds, is a misleading position being held by both the National Treasury and the Commission on Revenue Allocation (CRA).
The governors told the committee chaired by Mandera Senator Ali Roba that the adjustment has for the last three financial years prejudiced counties.
“There is no justifiable reason to reduce the RMLF and lump it together with the shareable revenue. The ministries of Health, Roads, Water and Agriculture still retain huge allocations despite such functions being devolved,” said Ms Waiguru.
According to CRA, the provision in Division of Revenue Bill 2024 of Sh16.6 billion, as additional allocations to county governments does not cover the additional resources required by the devolved units to implement national government-initiated policies. The commission recommended that county governments get Sh398.14 billion.
The governors also said that although counties are footing the bills for running and operating the early childhood development education centres, there has been no fund allocation. This, they argued, has vertically increased their wage bills, and asked Senate to fight for more allocations to the counties.
