County governments will get Sh387 billion in the current financial year following a string of negotiations.
The mediation committee of the National Assembly and the Senate agreed on the figures after days of intense discussions.
"The figure we have agreed upon is Sh387 billion as mediated allocation to the counties," Mandera senator Ali Roba said.
Roba co-chaired the mediation team on the revised Division of Revenue Bill, 2024 alongside Kiharu MP Ndindi Nyoro.
Nyoro said the the team agreed on the amount after several considerations, including the performance of revenues, inflation and other costs that counties are expected to incur.
The mediation followed a standoff between the Senate and the National Assembly over the amounts that should be allocated to the devolved units.
While the Senate demanded Sh400.1 billion, the National Assembly had insisted on Sh380 billion, triggering a standoff that threatened to paralyse operations in counties.
Treasury had earlier dismissed calls for an additional Sh20 billion for counties, with Cabinet Secretary John Mbadi urging governors to accept the Sh380 billion proposed by the National Assembly.
Speaking on the ongoing standoff, Mbadi argued that while the demand for increased funds is legitimate, the country's struggling economy cannot sustain the Sh400 billion sought by senators and county governments.
"Governors should just accept Sh380 billion this financial year as we work out ways to increase the allocation next year," Mbadi told Nation.
He emphasised the need for financial prudence, adding, "I would love to give counties more money, but our economy simply cannot support it for now."
Former Prime Minister Raila Odinga had joined senators in advocating for the Sh400 billion allocation, accusing the National Assembly of undermining devolution.
Raila highlighted that the Sh380 billion proposed falls short of the legal requirement, which mandates counties receive at least 15 per cent of national government revenue.
Legislators from the National Assembly attributed the reduction to a revenue shortfall following the rejection of the Finance Bill, 2024, which created a gap of Sh346 billion.
