Senators and Members of the National Assembly are once again headed for mediation over funds due to county governments following a dispute over an additional Sh60 billion.
The latest development comes after the National Assembly rejected Senate amendments to the Division of Revenue Bill, 2025, approving Sh465 billion as funds for counties for the financial year ending June 2026.
The National Assembly had approved Sh405 billion as equitable share to counties as had been proposed by the National Treasury.
However, senators rejected the allocation, holding out for Sh465 billion to be given to the 47 county governments.
Moving the motion on Tuesday, Majority Leader Kimani Ichung’wah said the fiscal space the country is operating in cannot allow for an increase in allocations.
“The Sh465 billion is an increase of Sh65 billion above what is agreed and bearing in mind the fiscal space the country is operating in, it may not be practical to increase. Therefore, having considered that, I think it is only fair to reject these amendments by the Senate and allow us to go into early mediation. I therefore beg to move the House to reject in totality this proposal by the Senate,” said Mr Ichung’wah.
National Assembly Majority Leader Kimani Ichungwah.
Photo credit: Jared Nataya | NMG
“With the fiscal space we are operating in, it is abnormal for anyone to think we should be increasing this money upwards,” said Bumula MP Jack Wamboka while seconding the motion.
The development now means that the two Houses will be forced to set up a mediation committee to try to hammer a compromise in order to forestall a major cash crunch should Parliament fail to hammer a deal.
Senators are adamant that the Sh405 billion proposal represents a marginal increase from the current allocation of Sh387.4 billion the counties received after a long-drawn mediation process last year.
The Finance and Budget Committee Chairperson Ali Roba has said nothing less than Sh465 billion should go to the devolved units, adding that the recommendation took into account the non-discretionary expenditure from the national government priorities expected to be implemented by the counties.
Mr Roba said the projects amounting to an extra Sh34.9 billion will be borne by the county governments.
He explained that the counties are set to incur Sh4.1 billion for housing levy, Sh6 billion as contributions to enhanced National Social Security Fund, matching allocation on county aggregation industrial parks project amounting to Sh11.8 billion and matching allocation to community health promoters amounting to Sh3.23 billion.
Senator Ali Roba.
Photo credit: File | Nation Media Group
This is in addition to Sh6.3 billion to cover annual wage increment in the Integrated Personnel and Payroll Database (IPPD) system, basic salary increment as per the doctor’s collective bargaining agreement of Sh3.5 billion.
“All these add up to Sh465 billion and hence the committee recommends the House adopt this county equitable share for the Financial Year 2025/2026,” said Mr Roba.
He said that ordinary revenue is projected to grow by Sh259 billion yet despite the increase, devolved units will only get a marginal increase of Sh17.7 billion.
This, the former Mandera governor said, does not align proportionally with the growth in shareable revenue and will only serve to limit the abilities of counties to adequately finance devolved functions.
Kakamega Senator Boni Khalwale accused the national government of holding onto at least Sh29.7 billion that is supposed to go to counties.
He said the programmes and projects the funds are going to are functions that are meant to be done by the county governments.
For their part, governors are demanding the devolved units to be allocated at least Sh536.8 billion while the Commission on Revenue Allocation’s figure is Sh417.43 billion.
The Council of Governors (CoG) said the current proposal on shareable revenue to counties has failed to factor in non-discretionary expenditures by the devolved units emanating from national government priority projects.
CoG’s Finance committee chairperson Fernandes Barasa said the non-discretionary expenditures have a cumulative cost implication of Sh73.78 billion.
He said the expenditures include enhanced contributions to SHIF, rollout of universal health coverage and national government’s priority projects such as the county aggregation and industrial parks as well as other priority programmes such as community health promoters compensation.
Others are housing levy deductions (Sh4 billion), NSSF (Sh6 billion), cost of procurement of new medical equipment (Sh39 billion), annual wage increments (Sh6.3 billion), and doctors’ salary adjustments (Sh3.45 billion).
“We acknowledge the Senate's recommendation of Sh465 billion as equitable share to counties. However, this may not adequately address the financing needs of the counties. The Bill should be amended to allocate Sh2.29 trillion to the national government and Sh536.88 billion to county governments, respectively,” said Governor Barasa.
