A fresh clash is looming over the sharing of revenue between the national and county governments for the coming financial year, with the two tiers of government proposing more than Sh140 billion apart.
The development comes after the Council of Governors (CoG) said it would not settle for less than Sh547 billion as the counties' fair share of revenue for the financial year ending June 30, 2026.
On the other hand, the national government is proposing that the 47 counties receive only Sh405 billion in the financial year beginning July this year.
The proposed amount is a paltry Sh17.6 billion more than what the county governments received for the current financial year after months of stalemate.
The devolved units settled for Sh387 billion after President William Ruto withdrew the controversial Finance Bill 2024, leading to adjustments in the overall budget, instead of the Sh400.1 billion agreed after mediation between senators and MPs.
To make matters worse, the Commission on Revenue Allocation (CRA) says counties should get at least Sh30 billion more.
The commission has proposed that county governments receive at least Sh417.4 billion in the coming financial year.
Appearing before the Senate Finance and Budget Committee on Thursday, CoG Finance Committee Chairman Fernandes Barasa said counties need no less than Sh547 billion in the coming financial year.
Supporting the governors' stance, committee chairperson Ali Roba accused the national government of conniving with the National Assembly to deny counties funds.
He said there was no justification for the national government to cut funds to counties while allocating additional funds running into billions to ministries, departments and agencies (MDAs).
"This situation is deliberate and deceitful because the national government insists on working with the audited and approved accounts for 202/2021 financial year yet they have the one for 2023/2024. The National Assembly is part of the plan," said the Mandera senator.
Kakamega Senator Boni Khalwale added: "Some Sh29.7 billion has been taken away cleverly from counties and given to MDAs. This means we are dealing with people who are not keen on devolution."
Appearing before the committee, CRA deputy chairperson Koitamet Olekina agreed with the governors and senators, saying that according to the 2025 Budget Policy Statement (BPS), shareable revenue is expected to increase by Sh259.1 billion from Sh2.57 trillion in the financial year ending June 30, 2025 to Sh2.83 trillion in the period under review.
Consequently, he argued that the national government should take Sh2.4 trillion while counties should have Sh417.4 billion and the Equalisation Fund should be allocated Sh7.85 billion.
Mr Olekina said any reduction in the share of allocations to county governments will have a negative impact on the ability of governments to improve service delivery to citizens and this amounts to a claw back on the objects of devolution.
“The Commission therefore submits that the provision to allocate 47 county governments an additional Sh17.6 billion for the financial year ending June 2026 does not amount to equity in the sharing of nationally raised revenues,” said Mr Olekina.
The CRA deputy chief executive said counties also have conditional financial obligations amounting to Sh25.03 billion that were supposed to commence in the current financial year.
However, the implementation of the specific projects and programmes have not been fully funded due to the downward revision of the projected recurrent revenue for the year under review.
The projects include Sh11.75 billion for county aggregation and industrial parks, Sh3.23 billion for compensation to community health promoters, Sh4.05 billion for county contributions to the housing levy and Sh6 billion for contributions to the National Social Security Fund.
County governments are also expected to provide social health insurance for vulnerable groups, pay for doctors' collective bargaining agreements and provide annual salary increments for their employees.
"Given that county governments also require more than Sh25 billion to implement national government initiated programmes and policies, a recommendation for an allocation of additional Sh30 billion to county governments is below this estimation of Sh37 billion," he said.
He said the Commission notes that the national government implements strategic interventions that are not necessarily equitably distributed across the country.
Mr Olekina said it was important for Parliament to protect devolution by ensuring that revenue generated nationally is shared equitably between national and county governments and between county governments.
“National interest is not synonymous to national government priorities. The national interests can be implemented by either level of government based on the law of subsidiarity," he said.
