Governors have declared a deadlock in ongoing talks over the vertical sharing of revenue between the national government and the devolved units for the financial year 2024/2025.
Vertical sharing refers to the basis for equitable allocation of revenue raised nationally between the two tiers of government.
The National Treasury has proposed Sh391 billion for counties while the Commission on Revenue Allocation (CRA) wants the counties allocated Sh398.14 billion.
The Council of Governors has, however, tabled Sh439.5 billion as the equitable share to counties and Sh10.52 billion as the Road Maintenance Levy Fund.
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 team comprising members from the Council of Governors (COG), CRA and the National Treasury to further deliberate to strike a deal.
On Tuesday, COG chairperson Anne Waiguru said the talks have hit a brick wall raising concerns about its 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. Given 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,” said Ms Waiguru.
Governors have stuck to the Sh450 billion for counties saying it is based on rising operation and maintenance costs in the devolved units.
Higher allocation, Ms Waiguru said, is to factor in emerging items that will occasion extra 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 the 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,” said Ms Waiguru also the Kirinyaga County governor.
Discussions on the amount counties should get have also been presented before the Intergovernmental Budget and Economic Council (IBEC) chaired by Deputy President Rigathi Gachagua where likewise, no consensus was reached.
“We, therefore, call upon the National government to reconsider their position given the aforementioned budgetary items. This will allow counties to execute their mandate and ensure efficient service delivery on their assigned functions,” said Ms Waiguru.
