MPs have initiated a process to unlock Sh60 billion that the national government owes counties but cannot be released since the Division of Revenue Bill, 2024 has not been passed.
While the law requires the Bill to be enacted by June 10 or before commencement of the next financial year, it is yet to be passed two months into the new financial year.
As the National Assembly resumes sittings tomorrow, the lawmakers will explore a stop-gap measure to allow National Treasury Cabinet Secretary John Mbadi to release funds to counties.
MPs want to come up with legislation to allow county governments to access their minimum share of revenue guaranteed by Article 206(2) of the Constitution. This will enable them to offer services pending enactment of the Division of Revenue Bill.
If passed, the law will also empower the Controller of Budget to authorise withdrawals of this minimum amount already charged from the Consolidated Fund.
“The legislation is not in any way and must not be construed as an attempt to replace the Division of Revenue Bill contemplated by the Constitution. On the contrary, this would be intended to put in place interim measures for the financing of county governments in the event of delayed or protracted enactment of the Division of Revenue Bill,” reads a brief from the National Assembly.
During the Intergovernmental Budget and Economic Council meeting held early this month, Mr Mbadi promised governors that he will give them at least 50 per cent of the shareable revenue.
He told the Nation that he was to rely on the PFM Act regulations to release the 50 per cent but has since been advised that he cannot do so without an anchor law.
He confirmed that Treasury is yet to disburse Sh60 billion to counties for the months of July and August.
“I am in a dilemma because there is no law at the moment yet I am ready to give money to counties. They will soon grind to a halt, which is not a good thing. We should support counties,” Mr Mbadi said.
He added that he has written to the Attorney-General Dorcas Oduor and is waiting for directions on how to proceed.
Article 203 (2) of the constitution guarantees county governments a minimum equitable allocation of 15 per cent of total national revenue based on the most recent audited accounts.
In 2019, the National Assembly tried to cure the situation when it came up with the Public Finance Management (Amendment) Bill, 2019.
The Bill was proposing a new section 191A in the Public Finance Management Act, 2012 to allow the Senate by resolution to divide the guaranteed 15 per cent among county governments in the event the Division of Revenue Bill not being passed by June 10.
Although passed in the National Assembly, the Bill was rejected at the Senate, which argued that it was an attempt by the national government to deny counties money.
