Governors have declared a deadlock in the ongoing deliberations over the vertical sharing of revenue between the national government and county governments in the Financial Year 2024/2025.
Vertical sharing refers to the basis for equitable sharing of revenue raised nationally between the national and the devolved governments.
The National Treasury has proposed Sh391 billion for the counties while the Commission on Revenue Allocation (CRA) wants the counties allocated Sh398.14 billion.
The Council of Governors has proposed Sh439.5 billion as the equitable share to counties and Sh10.52 billion as Road Maintenance Levy Fund (RMLF).
During the 22nd Ordinary Session of the Intergovernmental Budget and Economic Council (IBEC) held on January 29, it was resolved that the matter be referred to a task team comprised of members from the Council of Governors (COG), CRA and the National Treasury, to further deliberate with a view to achieve consensus on the amount to be shared between the two levels of Government.
On Tuesday, COG chairperson Anne Waiguru revealed negotiations have hit an impasse, raising concerns about the impact on vital services and projects at the county level in the coming fiscal year.
“After lengthy discussions and analysis of the proposed recommendations by the task team, the three parties retained divergent positions on their proposed figures for shareable revenue. In view of the foregoing and upon careful consideration of the matter at hand, the Council hereby declares a stalemate on the discussions around vertical sharing of revenue,” Ms Waiguru said.
The county bosses’ hardline that their proposal of Sh450 billion to counties is adopted is ostensibly based on the rising of operations and maintenance cost in counties.
The increased allocations, Ms Waiguru said, is also to factor in emerging items that will occasion additional expenditure by Counties such as the new mandatory National Social Security Fund (NSSF), Social Health Insurance Fund (SHIF) and Housing Levy contributions.
“Our proposal is also buttressed by need to ensure County Governments are cushioned from the rising cost of inflation across various devolved sectors, the need for a commensurate adjustment for revenue growth and provisions of an allocation towards County employees’ annual salary incremental cost,” Ms Waiguru, the Kirinyaga Governor, said.
Discussions on the amount counties should get has also been presented before the Intergovernmental IBEC chaired by the Deputy President Rigathi Gachagua, where no consensus was reached.
“We therefore call upon the National Government to reconsider their position in view of the aforementioned budgetary items. This will allow Counties to execute their mandate and ensure efficient service delivery on their assigned functions,” Governor Waiguru said.
