Counties are set to lose Sh20 billion in the current financial year as President William Ruto reorganises the budget after withdrawal of the Finance Bill, 2024.
In a memorandum to Parliament, Ruto has declined to sign the County Allocation of Revenue Bill, 2024 that stipulates an allocation of Sh400.1 billion to the devolved units.
Instead, the President has proposed an amendment to slash the allocation to Sh380 billion, dealing a heavy blow to counties.
“In exercise of the powers conferred on me by Article 115 (1) (b) of the constitution, I decline to assent to the County Allocation of Revenue Bill, 2024 and refer the Bill for reconsideration by the Senate,” Ruto said.
“I recommend that the Bill be amended by deleting the First Schedule and replacing it with a Schedule that is attached to the Memorandum.”
The new figure is Sh5 billion less than what the county governments received in equitable share in the last financial year, and Sh20 billion less than what they had already been allocated in the current fiscal year.
In refusing to sign the Bill into law, Ruto cited failure to enact the Finance Bill, 2024.
The failure, he said, has necessitated the re-organisation and rationalisation of the government's financial arrangements in the current financial year.
Either House will have to marshal two-thirds of its members – a near impossible task – to overturn the President’s memorandum.
“The Houses of Parliament shall either, by a majority vote, amend the Bill in light of the President’s reservations or, by a vote supported by two-thirds of members of each House, pass the Bill a second time without amendment or with amendments that do not fully accommodate the President’s reservations,” Article 115 of the constitution says.
However, controversy has surrounded the President’s memo seeking to amend the County Allocation of Revenue Bill, 2024.
CARB is a proposed law that splits among the 47 devolved units, the amounts allocated to them from the national cake.
Division of Revenue Bill, 2024, which was passed and signed into law, gave the counties Sh400.1 billion.
The Act splits between the national and county government revenues generated nationally.
Lawyers and lawmakers say there is no way the President can ask Parliament to amend the County Allocation of Revenue Bill, 2024 without making changes to Division of Revenue Act.
“What would necessitate the Allocation Bill to be returned if the Revenue Bill has been assented to?” Senate Majority Whip Boni Khalwale asked.
“How can the allocation [Division of Revenue Bill] be invalidated? I say this because we are very conscious of the fact that our counties are constrained."
Nairobi Senator Edwin Sifuna questioned the amendment of the county allocation revenue bill without amending division of the revenue bill.
“It’s impossible, in fact the President has no role on how counties share their revenue," he said.
“We have vowed as the Senate that counties will not lose even a single penny from what we passed."
Nairobi Governor Johnson Sakaja said reducing county allocation will be a breach of the law.
He said no amendment can be made to the Division of Revenue Bill which has already been signed by the President.
“The law is very clear that where there is a shortfall, the national government will bear it,” Sakaja told the Star.
Kisii Senator Richard Onyonka who is also a member of the Budget and Finance Committee that is processing the President’s memorandum said the committee will throw the ball back to the Senate.
“We want to bring the issue back to the plenary for Kenyans to know the senators fighting devolution,” he said.