- Roba said that the counties received Sh385 billion in the last fiscal year and there is no way they will accept Sh380 billion.
- He added that the counties have to fund non-discretionary expenditure occasioned by the national government amounting to Sh39.98 billion.
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President William Ruto and National Treasury CS John Mbadi could further reduce the national government budget to free cash for counties.
The development comes after the senators vowed to reject any reduced allocations to the devolved units as proposed by the President and the Treasury.
Ruto and Mbadi have Parliament to slash the county revenue by Sh20 billion – from Sh400.1 billion to Sh380.0 billion in the current financial year.
This follows the withdrawal of the controversial Finance Bill, 2024 that saw the government forego about Sh350 billion in revenue.
Speaking during a meeting with Mbadi on the new Division of Revenue Bill, 2024, Senate Finance and Budget Committee members rejected the Treasury’s proposal.
The committee is chaired by Mandera Senator Ali Roba.
“Our position is, don’t touch money to counties. To reduce money from the national government but don’t interfere with county funds,” Kisii Senator Richard Onyonka.
Roba said that the counties received Sh385 billion in the last fiscal year and there is no way they will accept Sh380 billion.
He added that the counties have to fund non-discretionary expenditure occasioned by the national government amounting to Sh39.98 billion.
The counties will inherit on their payroll Sh4 billion in terms of housing levy, Sh3 billion in enhanced National Social and Security Fund (NSSF) contributions and Sh5.3 billion for county aggregation and industrial parks.
Further, the counties will also cater to community health promoters’ payments to the tune of Sh3.23 billion, Sh5.64 billion for medical equipment services, and Sh2.85 billion towards the Integrated Payroll and Personnel Database.
There is also the Sh5.8 billion to cater for doctors’ Collective Bargaining Agreement (CBA) signed up to 2024.
“National government has borrowed over the years for flimsy reasons but it cannot do so to ensure counties get money to run their projects," Roba said.
How do you expect counties to deal with all the above projects?” he posed.
Mbadi had made a case for the reduced allocation, saying it was based on the reduced projected ordinary revenue of Sh2.6 trillion from Sh2.9 trillion before the Finance Bill was dropped.
The CS said the government will not borrow to ensure counties get Sh400.1 billion previously approved by Parliament.
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 has borne 93.6 per cent of the austerity measures while counties will only bear 6.4 per cent.
Mbadi told the committee that out of the Sh2.63 trillion working budget; debt servicing alone takes Sh1.1 trillion.
Non-discretionary expenditures excluding payment of salaries gobble up Sh190.4 billion, and Sh750 billion goes to salaries and wages monthly leaving the Exchequer with only Sh531 billion.
Counties are set to get Sh380 billion, leaving only Sh151 billion for other programmes like the national government constituency development fund, and national government affirmative action fund, among others.
“This means we have been borrowing to finance recurrent expenditure which is unconstitutional and immoral. We must stop this and live within our means,” the CS said.
However, the senators could hear none of it.
Nominated Senator Tabitha Mutinda said it would be impossible for the committee to recommend anything less than what counties received in the last financial year.
The vice chairperson accused the Treasury of only being keen to ensure the national government has enough funding at the expense of counties.
“You have focused more on national government functions at the expense of counties. Are you only concerned about expenditure at the national level?” she posed.