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Deadlock in revenue talks as MPs offer counties Sh425bn
The National Assembly in a past session.
Mediation talks between the National Assembly and the Senate over the amount of money to be allocated to counties hit a deadlock on Tuesday after the latter increased its offer by only Sh5 billion.
The Mediation Committee, co-chaired by Alego Usonga MP Samuel Atandi and Mandera Senator Ali Roba, adjourned its sittings after National Assembly members proposed raising county allocations from Sh420 billion to Sh425 billion.
On their part, senators reduced their demand from Sh454.7 billion to Sh440 billion, but the gap between the two Houses remained significant, forcing a stalemate. The committee is scheduled to reconvene at 1pm on Wednesdy in a fresh attempt to break the deadlock.
The National Assembly and the Senate are seeking a compromise on the contentious Division of Revenue Bill, 2026, which determines how nationally raised revenue is shared between the national and county governments.
“We have hit a dead end. We have no more room to increase the revenue to counties. We have no more fiscal space,” Mr Atandi said before the meeting was adjourned to allow further consultations.
When the meeting resumed after lengthy informal consultations, Mr Atandi told members that the Budget and Appropriations Committee (BAC), which he chairs, had identified areas where spending could be reduced to free up additional funds for counties.
“We have found areas where we can cut and we can only raise Sh3 billion. So, the allocation to counties will be Sh423 billion. I have since consulted further and we can get another Sh1 billion to make it Sh424 billion,” he said.
The National Assembly team later raised the offer to Sh425 billion.
The Senate Finance and Budget Committee chairperson said senators had already scaled down their demand from Sh454.7 billion to Sh443 billion. Later in the evening, they reduced the figure further to Sh440 billion, insisting they could not go any lower after conceding Sh14.7 billion.
Mr Roba requested more time to allow senators to consult further, including with the Council of Governors.
Earlier, Mombasa Senator Mohammed Faki had proposed a compromise figure of Sh445 billion.
“If the National Assembly is climbing by a mere Sh3 billion, we should also climb down by a similar amount until we meet somewhere,” Mr Faki said.
The disagreement over the Division of Revenue Bill, 2026 arose after the National Assembly passed the Bill allocating counties Sh420 billion as their equitable share for the financial year beginning July 1, 2026.
The Senate subsequently amended the Bill, raising the allocation to Sh454.7 billion, prompting the formation of a mediation committee to negotiate a common position.
The Commission on Revenue Allocation had recommended an allocation of Sh459 billion to counties in the 2026/27 financial year.
Several senators, including Narok Senator Ledama Ole Kina, accused the National Assembly of delaying approval of the national government's audited accounts for the past two financial years despite reports having been tabled by the Auditor-General.
“You are using audited and approved national government revenue reports for the 2021/22 financial year. You are late by two years despite the Auditor-General having tabled accounts for 2023/24 and 2024/25.Had you approved the latest audited accounts, the allocation to county governments would be higher than Sh450 billion,” Mr Ole Kina said.
The Constitution requires that county governments receive at least 15 per cent of all revenue raised nationally, calculated using the most recent audited accounts approved by the National Assembly.
While the National Assembly is holding firm at Sh425 billion, citing fiscal constraints, the Senate maintains that at least Sh440 billion is necessary to enable counties to clear pending bills, implement salary adjustments recommended by the Salaries and Remuneration Commission (SRC) and support Community Health Promoters.
It also cites the need to fund key programmes such as County Aggregation and Industrial Parks, the Financing Locally-Led Climate Action Programme, the Food Systems Resilience Project and the National Agricultural Value Chain Development Project.
“Our proposal is data-driven and informed by consultations. We must keep these realities in mind as we deliberate,” senator Roba said.
Mr Atandi, however, said the country was facing a revenue shortfall of about Sh200 billion despite ongoing efforts to improve tax collection.
The National Treasury and the Budget and Appropriations Committee have proposed a Sh4.8 trillion budget for the next financial year, of which Sh1.1 trillion will be financed through borrowing.
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