National Treasury CS John Mbadi appears before the Senate Committee on Finance and Budget at County Hall in Nairobi on September 17, 2024.
A major crisis looms as counties may be forced to wait longer to receive funds due to a deadlock over a proposed Sh20 billion cut in this fiscal year’s shareable revenue.
Senators said that they will not accept the planned slash while the national government maintained that there is no money.
Appearing before the Senate Committee on Finance and Budget Monday, National Treasury Cabinet Secretary John Mbadi told senators the government will not borrow money to give devolved units Sh400.1 billion.
The counties’ share had previously been approved by Parliament before austerity measures kicked in following the withdrawal of Finance Bill, 2024.
But the senators hit back and said that the government should curb wastage of funds spent on unconstitutional offices like the Office of the First Lady, Spouse of the Deputy President and Office of Prime Cabinet Secretary and a string of advisers.
CS Mbadi said the country is operating in a tight fiscal space due to a low ordinary revenue collection shortfall of at least Sh316.7 billion in the previous financial year leading to budget cuts across both levels of government.
He pointed out that the national government bore 93.6 percent of the austerity measures compared to counties’ 6.4 percent.
The CS told the senators that out of the Sh2.63 trillion working budget; debt servicing alone takes Sh1.1 trillion, non-discretionary expenditures excluding payment of salaries gobbles up Sh190.4 billion, Sh750 billion goes to salaries and wages monthly leaving the Exchequer with only Sh531 billion.
Out of the remaining amount, he said, Sh380 billion will be disbursed to counties, leaving Sh151 billion for other programmes like the National Government Constituency Development Fund and National Government Affirmative Action Fund.
“This means we have been borrowing to finance recurrent expenditure which is unconstitutional and immoral. We must stop this and live within our means,” said Mr Mbadi.
The senators maintained their stand, saying that they will not accept anything less than Sh400 billion as they had already climbed down from Sh415.9 billion they had proposed after mediation.
The committee chairperson, Mandera Senator Ali Roba said counties received Sh385 billion in the last fiscal year and there is no way they will accept Sh380 billion at a time when they have to also fund non-discretionary expenditure occasioned by the national government amounting to Sh39.98 billion.
The Commission on Revenue Allocation had recommended a figure of Sh398 billion to go to counties while governors demanded Sh439.5 billion.
Mr Roba said counties will inherit on their payrolls Sh4 billion for housing levy, Sh3 billion in enhanced National Social and Security Fund (NSSF) contributions and Sh5.3 billion for county aggregation and industrial parks.
The counties will also cater for community health promoters’ payment to the tune of Sh3.23 billion, Sh5.64 billion for medical equipment services, and Sh2.85 billion for the Integrated Payroll and Personnel Database.
There is also the Sh5.8 billion for the doctors’ Collective Bargaining Agreement signed up to 2024.
Kakamega Senator Boni Khalwale said the national government made counties commit to implementing the above projects, and now expects them to get money out of the blues to fund the same.
