President Ruto, governors fail to agree on revenue sharing for the third time
President William Ruto (centre), Deputy Rigathi Gachagua, Chair of Governors Ann Waiguru and other leaders during a consultative meeting with county governors in Naivasha, Nakuru County on February 10, 2023.
President William Ruto and governors yesterday failed to agree on equitable revenue sharing for a third time.
That happened even as county bosses agreed to withdraw court cases against the national government.
In a meeting chaired by the President himself, the governors insisted that the National Treasury gives them Sh425 billion.
The meeting was also attended by Deputy President Rigathi Gachagua and Commission on Revenue Allocation (CRA) officials.
Governors interviewed by the Saturday Nation said both parties stood their ground but the summit goes on today.
“We have not reached an agreement despite the many hours spent on negotiations. Our demands have not changed,” one of the governors said.
Two others confirmed that the government remained adamant, saying it does not have additional money.
The Gachagua-led Intergovernmental Budget and Economic Council (IBEC) failed to resolve the county funds row for a second time last week.
Governors stuck to their guns, demanding Sh425 billion from the National Treasury, prompting yesterday’s meeting with the President.
The CRA proposed that the shareable revenue be pegged at Sh407 billion.
The stalemate started in December when the Council of Governors rejected the proposal by CRA, insisting on Sh425 billion.
In its latest proposal, the commission argues that Sh407 billion translates to a 23.5 per cent increment of the most recent audited and approved accounts for the financial year ending June 2020, amounting to Sh1.73 trillion.
According to the CRA, the shareable revenue is projected to increase by 17 per cent from Sh2.192 trillion in the financial year ending June 2023 to Sh2.56 trillion in the following fiscal year.
Governors are insisting on a 15 per cent increase (Sh55 billion) of the projected revenue growth.
The equitable share has been a hot potato, with governors insisting it should be increased from the current Sh370 billion to Sh425 billion.
Treasury says it can only increase the amount to Sh380 billion.
During yesterday’s meeting, the governors’ council agreed to withdraw court cases it filed against the government.
“Sometimes we disagree and take each other to court, but one of the things we discussed and agreed on is that the council will withdraw the cases. We will resolve most of the issues out of court,” Council of Governors chairperson Ann Waiguru said.
President Ruto is also using the meeting to resolve contentious matters between the government and counties.
In his opening remarks, Dr Ruto reminded the leaders to work towards improving the lives of the Kenyans.
“We are not meeting here to discuss positions or political parties. We want to discuss governance,” he said.
Dr Ruto added that the two levels of government need to work together.
“I will not just serve the people who voted for me and equally expect you to do the same,” the President added.
Also to be discussed are constitutional affairs, devolution, critical bills on county governments and audit reports.
The summit is the supreme body of intergovernmental relations. The law provides that it meets at least two times a year.
Its role, among many others, is to promote consultations and cooperation between the two levels of government.
Food security
Today, they will also talk about possible areas of collaboration, Universal Health Care, medical supplies, affordable housing and food security, especially the fertiliser subsidies.
On the second day there will also be an update from a meeting between the county bosses and the president on January 7 in Nanyuki.
Kakamega governor Fernades Barasa speaking on the sidelines admitted that the President was concerned with cases pitting counties and the national government.
“The President was categorical that any offending Bill that is not supporting devolution be withdrawn,” pointed out the governor.
Mr Barasa said the meeting will, on the second day, re- look into revenue allocation with the county boss optimistic that they will have amicable solutions to the thorny issues.
“The president was very passionate about the successes that could be achieved through devolved units, citing agriculture among other devolved functions,” added Mr Barasa.
Council of Governors chairperson Ann Waiguru talked of their commitment on delivering on their mandate.
“People of Kenyans are looking upon us to deliver on the election pledges, especially on lowering on the cost of living,” she told the meeting.
The President is said to have directed The Intergovernmental Relations Technical Committee (IGRTC) to move with speed and finalise the transfer of functions.
Disbursement schedule
In his opening remark, Dr Ruto voiced the need for a reliable disbursement schedule, a topic that is also expected to dominate the second day talks between the two levels of government.
Management of the wage bill and payment of pending bills in counties is also in an agenda at the meeting.
The meeting comes as counties continue to sag under huge debts and a backlog of payments owed to contractors and suppliers. The unsettled obligations include payments to contractors of county projects, suppliers of goods and services as well as unremitted statutory deductions such as payroll taxes, pension and medical cover contributions.
According to the 2023 Draft Budget Policy Statement (BPS) released last week, a special audit by the Auditor-General shows that, between June and December last year, county governments cleared verified pending bills worth Sh48 billion.
“Sh108.1 billion worth of pending bills were found to be ineligible for payment due to lack of documentation to support services rendered or work done,” the report states.
The document shows that Wajir, Kwale, Nairobi and Kiambu are the worst-performing counties in clearing pending dues.
Mandera County is the only devolved unit that cleared its debt amounting to Sh195.6 million.
Through circular No. 2/2022 dated March 24, 2022, the National Treasury directed governors and county finance executives to ensure outstanding pending bills are paid to avoid disruption of operations and other financial obligations of the counties.
