Members of County Assemblies are seeking court's intervention following reduction of their annual financial allocation from Sh40 billion to Sh36 billion in the mid-year mini-budget.
They believe the 'abrupt' Sh4 billion reduction will affect their oversight role on Governors, operations, salaries, procurement and other expenses required for their effective functioning.
Though their budget was reduced as reflected in the County Allocation of Revenue Act (2024), the allocation to the Governors' County Executives was increased by Sh7 billion. They want the Act declared unconstitutional.
At the same time, the court has lifted a temporary order issued in January this year stopping the release of the equitable share funds to the County Governments pending determination of the legal dispute.
This is after the Council of Governors informed the court that the interim order had caused financial paralysis in the counties and disrupted service delivery.
COG told the court that the MCAs' budget reduction was due to the GenZ 2024 protests, which led to the withdrawal of the Finance Bill 2024/2025.
"The protests negatively impacted revenue collection, thereby necessitating a downward revision of the equitable share allocated to County Governments from Sh400 billion to Sh387 billion. Budget ceilings for both the County Executives and the County Assemblies are determined by the Senate pursuant to the County Allocation of Revenue Act," said the COG.
It stated that the Senate responded to economic hiccups in the Country, hence the MCAs' budget cut.
In response to the reduced equitable share, the COG said: "Senate proportionally adjusted the budgetary ceilings of both entities in compliance with constitutional and statutory guidelines".
It is the COG's case that the Senate lawfully undertook the budgetary adjustments in accordance with these prevailing financial constraints pursuant to its constitutional mandate.
In the court dispute, the MCAs through their lobby group, County Assemblies Forum, argue that they were not involved in the decision contained in the County Allocation of Revenue Act, 2024, which came into force in January this year paving the way for the budgetary cuts.
They want court to declare Section 5 of the Act as read together with the Second Schedule of the same unconstitutional to the extent that it reduces the budget ceilings for recurrent expenditure of all County Assemblies.
"This financial year, 2024/25, in the County Allocation of Revenue Act, 2024 the allocations to the County Assemblies have been reduced from Sh40.6 billion to Sh36.4 billion, which is a reduction of about Sh4 billion, unilaterally and without any explanation or justification," says the lobby group in the court papers.
According to them, the enactment of the law, which provided for a reduction in the recurrent budget ceilings for the County Assemblies, is unconstitutional and consequently a nullity from the beginning.
"The reduction of the financial resources to the County Assemblies, compromises their ability to effectively legislate and oversee the County Executive and represent the interests of the people as required under the Constitution," says their leader Mr Chege Mwaura in an affidavit.
The Governors, while asking for the lifting of the interim orders barring implementation of the said section of the law, told the court that the orders had effectively halted the disbursement of funds to County Governments.
They said the orders had also denied them access to their budgets to enable them to proceed with planned expenditure, thereby leading to a disruption in service delivery and governance.
Lifting the interim order that had stopped the release of the funds, Justice Dora Chepkwony said the order was prejudicial to the county executives.
"It is beyond peradventure that the continued operation of the conservatory orders has, and is highly likely to lead to a financial crisis at county level, hence threaten the stability of devolved governance," said judge Chepkwony.
The judge emphasized that "in cases where judicial intervention affects budgetary allocations, courts must exercise extreme caution to prevent unintended financial and governance crises".
"Public interest and welfare calls for the discharge of the conservatory orders to enable the County Governments to function effectively," said Justice Chepkwony.
She said the court will embark in addressing the questions of whether the County Allocation of Revenue Act, 2024 and whether the budgetary allocation was constitutionally, fairly and equitably distributed.
"Setting aside of the conservatory orders should not be taken to mean that the MCAs concerns as raised in the petition will not be addressed. If the Petition succeeds, the court reserves the liberty to issue appropriate reliefs to remedy any constitutional violations, including retrospective budgetary adjustments or compensatory measures," explained the judge.
For expeditious disposal of the case, the judge directed the parties to proceed with the main petition. The case will be mentioned on April 7, 2025, to confirm compliance and to fix a judgment date.
