Showdown looms as Senate rejects new Ksh.316B revenue allocation


Showdown looms as Senate rejects new Ksh.316B revenue allocation

In Summary

  • The fresh Bill, as published by the committee chaired by Kikuyu MP Kimani Ichung’wa, proposed Ksh.1.5 trillion remaining at the national Government; with a further Ksh.5.7 billion to counties as equalization fund as part of the Ksh.1.87 trillion shareable revenue between the two levels of government.
  • The proposed county allocation is 30.5 percent of the last audited and approved accounts for the year 2014/2015 financial year.

The National Assembly Budget Committee has published a fresh Division of Revenue Bill proposing a Ksh.316.5 billion allocation to county governments.

But the new bill has been rejected by the Senate which has demanded a minimum allocation of Ksh.327 billion to devolved units.

Counties are now staring at a financial crisis, as the two chambers of Parliament tussle over the billions.

The fresh Bill, as published by the committee chaired by Kikuyu MP Kimani Ichung’wa, proposed Ksh.1.5 trillion remaining at the national Government; with a further Ksh.5.7 billion to counties as equalization fund as part of the Ksh.1.87 trillion shareable revenue between the two levels of government.

The proposed county allocation is 30.5 percent of the last audited and approved accounts for the year 2014/2015 financial year.

The controversial leasing of medical equipment for county hospitals has been allocated Ksh.6.2 billion while Ksh.4.3 billion is set aside for Level 5 hospitals.

Other proposed allocations to devolved units in the republished bill include Ksh.8.9 billion in fuel levy and conditional grants and loans of Ksh.38 billion largely sourced from foreign donor agencies and the World Bank.

In total, Ksh.378.1 billion proposed for the counties’ kitty in the 2019/2020 financial year.

Senators have however promptly rejected the proposal from the National Assembly, setting the stage for yet another showdown.

“We shall reject it with a resounding ‘No’, it shall collapse. I want to ask our counties to be patient, we are ready for a total shutdown of the national and county governments until more goes to the village,” said Nandi Senator Samson Cherargey.

Governors too have rejected the proposed allocations, terming the Ksh.316 billion a joke.

Council of Governors (COG) Chairman Wyclife Oparanya further urged the Senate to stick to the Commission of Revenue Allocation recommendation of Ksh.335 billion.

COG Deputy Chair Murang’a Governor Mwangi wa Iria blasted the National Assembly over what he termed a circus on division of revenue, further questioning the logic in allocating counties Ksh.2 billion more from last financial year’s share without factoring inflation and the declared 6.3% national economic growth.

The Commission on Revenue Allocation (CRA) had recommended a Ksh.335 billion slice of the 2019/2020 budget to county governments; a proposal rejected by the National Treasury and National Assembly.

Leader of Majority in the National Assembly Aden Duale accused the commission of making unrealistic recommendations and setting the House up against county governments.

“What we are saying is, for every Ksh.100 paid in taxes, Ksh.18 goes to counties while Ksh.82 remains at the national government,” said CRA Chairperson Jane Kiringai.

Duale and the budget committee in the National Assembly urged CRA, the Senate and county governments to consider the debt management efforts against perennial failure by the Kenya Revenue Authority (KRA) to meet its tax targets.

“What happens when you plan on a revenue projection of Ksh.1.8T and you don’t meet it, you borrow to fill the gap. In the subsequent you will say, debt becomes the first change, and so we share between the two levels of government what remains after paying debts. But that debt was used for national government functions,” added Ms. Kiringai.

With the freshly published Division of Revenue Bill facing rejection, counties could be plunged into a financial crisis.

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Story By Francis Gachuri
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