The financial crisis in county governments is set to continue following the failure by the Senate to debate and pass a Bill that would have provided for advance financing.
The Public Finance Management (Amendment) Bill 2019 seeks to cushion the operations at the counties from grinding to a halt in the event of delays in the passage of the Division of Revenue Bill (DORB) and the County Allocation of Revenue Bill (CARB).
The Bill by Kikuyu MP Kimani Ichung’wah was passed in the National Assembly on September 18, 2019, and taken to the Senate for concurrence but is yet to be prioritised for debate.
The Bill seeks to ensure that the 47 counties have access to a vote on account, which would allow them to access not more than 50 per cent of their equitable share from the national government.
Mr Ichung’wah, who did not anticipate delays in enacting the Carb and the formula, told the Nation that his proposal is predicated on Article 222 (1) of the Constitution.
He noted that, while the Article cushions operations at the national government by allowing withdrawals from the Consolidated Fund of up to 50 per cent, if the Appropriations Bill for the financial year has not been signed into law, counties are not covered.
According to the MP, counties also need to be covered so that critical services such as health and water do not run the risk of grinding to a halt in the event of a delay in enacting the two bills.
“This Bill cushions the interests of counties just like the Constitution does for the national government. It is not proper for the functions of the national government to run normally while those of counties suffer,” said Mr Ichung’wah. The DORB provides for the sharing of funds between the national and county governments while CARB provides for the sharing of devolved funds among the counties.
In the current financial year, Sh316.5 billion from the national government has been equitably allocated to the counties but the funds cannot be disbursed because the Senate is yet to pass the third generation revenue sharing formula.
To mitigate the risk of having the counties grinding to a halt, the Senate will be required to pass the Bill but with the amendments so as to include delays in the passage of CARB and the county revenue-share formula.
Last year, Attorney-General Kihara Kariuki told the Senate and the Council of Governors that there is no provision in law providing for advance financing for the counties.
Although the Supreme Court allowed counties to get funds if there is a delay in passing the bills, Mr Kariuki says that only Parliament can come to the rescue of the counties through a vote on account, which is essentially what Mr Ichung’wah’s proposal seeks to achieve.
The Bill is informed by the fact that Article 203 (2) of the Constitution guarantees the devolved units an equitable allocation of at least 15 per cent of the national revenue based on the most recent audited accounts as approved by the National Assembly.
If passed, it will empower the Controller of Budget to authorise withdrawals from the Consolidated Fund Services and allow the Senate, by a resolution, to divide the guaranteed amount among the counties.
According to the Public Finance Management Act, the counties cannot access their allocated amount before the CARB has been enacted. Similarly, the bill cannot be considered before the revenue-share formula has been passed.
Economist Tony Watima says the Senate has the task of passing the Bill with the modifications as the Kikuyu MP did not anticipate the situation of delayed enactment of the county revenue-share formula.
“This Bill merely seeks to put into place interim measures for the financing of the counties by freeing the minimum amount already allocated to them,” says Mr Watima.
Interestingly, when the Bill was taken to the Senate last year, it received a hostile reception and has never been considered for debate to date.
Senators argue that its passage will frustrate the annual passage of the DORB and in the process give the National Treasury a greater say over what goes to the counties.
National Assembly Minority Leader John Mbadi (Suba South), who sits in the Budget and Appropriations Committee that considered the Ichung’wah Bill, said the Senate could actually pass the Bill and have it signed so that counties don’t suffer but warned against it.
“The Bill can be passed and used but it impacts badly on Parliament. It is a route to defer decision-making,” said Mr Mbadi.
“It sets a bad precedent that in future we can waste time haggling, well aware that there is another route,” he noted.
Elgeyo Marakwet Senator Kipchumba Murkomen played down the urgency of the Bill, saying the expired second basis formula should be used to have counties get their monies at least in the current financial year.
“I don’t know what the driving force behind this Bill is, especially at a time like this. It is not necessary at all!” he said.
During the 2019/20 financial year, the passage of the DORB was delayed to September.
