25 governors put on the spot over billions in budget deficits

PHOTO | STEPHEN MUDIARI Governors and their deputies during a meeting at the Kenya School of Government in Nairobi on August 12, 2013. Governors were put on the spot for excessive spending on non-core functions, including travel and perks for county workers.

What you need to know:

  • According to the Commission on Revenue Allocation, 25 of the 47 counties are facing serious financial crisis because of huge deficits in their budgets
  • Only six counties have surpluses. These are Kwale (Sh596 million), Busia (Sh522 million), Turkana (Sh301 million), Tana River (Sh233 million), Samburu (Sh163 million) and Tharaka-Nithi (Sh143 million)
  • The Controller of Budget, Ms Agnes Odhiambo, warned county governments against excessive spending on local and foreign trips and imprests

Nakuru, Meru, Laikipia and Makueni are among 25 counties which are facing serious financial crises because of huge deficits in their budgets for the current financial year.

Figures released by Commission on Revenue Allocation (CRA) reveal that the four counties have deficits running into billions of shillings which they will have to plug to fund their operations between now and June 2014.

Nakuru and Meru counties have a deficit of Sh1.9 billion each while Laikipia has a Sh1.3 billion deficit. Makueni has a Sh1 billion deficit, Nyandarua (Sh714 million), Machakos (Sh672 million) and Kitui (Sh452 million).

This means they will have to find other sources of revenue to bridge the gaps in their budgets for this financial year.

The budgets for Nairobi, Embu, Kirinyaga, Murang’a, Nyeri, Kiambu, Narok and Kajiado have been categorised as balanced, meaning that they have enough money to fund their expenditure but have no surplus.

According to the team led by Mr Micah Cheserem, 25 of the 47 counties are facing serious financial crisis because of huge deficits in their budgets.

The 10 counties with the highest deficits are Mombasa (Sh9.6 billion), Vihiga (Sh2.9 billion), Nyamira (Sh2.5 billion), Kisumu (Sh2.2 billion), Nakuru (Sh1.9 billion), Meru (Sh1.9 billion), Siaya (Sh1.7 billion), Migori (Sh1.7 billion), Laikipia (Sh1.3 billion) and Nandi (Sh1.1 billion). These counties must establish alternative sources of revenue if they are to fund all their operations in the current financial year.

Fourteen counties received a clean bill of health with Mr Cheserem’s commission declaring their budgets were “balanced” because they have neither deficits nor surplus funds. These counties have enough money to run their operations without having to borrow from external sources.

Only six counties have surpluses. These are Kwale (Sh596 million), Busia (Sh522 million), Turkana (Sh301 million), Tana River (Sh233 million), Samburu (Sh163 million) and Tharaka-Nithi (Sh143 million).

Speaking during the first meeting of the Inter-governmental Budget and Economic Council meeting chaired by Deputy President William Ruto on Monday, Mr Cheserem expressed fears that operations in several counties could stall due to the budgetary deficits.

Reduce their expenditure

“Look at a county like Mombasa which has a deficit of almost Sh10 billion. How will Governor Joho fund some of his operations with such a deficit?”

He said that the CRA was in talks with counties with serious deficits. These might be required to reduce their expenditure plans to achieve balanced budgets. Mr Cheserem was also concerned that some counties such as Kakamega were factoring in as much as Sh2 billion in revenue to be obtained from donors.

“We are asking Governor Oparanya, who are these donors and how does he plan to fill the gaps if they do not release the funds.
“Furthermore, we are liaising with counties like Kisii and Mombasa to understand the sources of the huge external funding that they have factored in their budgets.”

The Controller of Budget, Ms Agnes Odhiambo, warned county governments against excessive spending on local and foreign trips and imprests.

“There is a huge allocation of resources on non-core activities such as local and foreign travel. We are aware that some countries are already suffering from fatigue because delegations from Kenya are everywhere,” she said.

“There is excessive expenditure at the county level, some counties are issuing huge imprests of up to Sh700,000 to Sh1 million. That needs to be addressed,” she warned.

She also warned some counties had budgeted for purchase of vehicles and mortgages for their staff without obtaining authority from the Salaries and Remuneration Commission as required by law. Her office has already written to 14 governors asking them to obtain the required approvals before she can authorise such expenditure.

Addressing the meeting which brought together governors and their finance secretaries, the Deputy President said prudent management of public resources was key to development of the counties.

“We should not come up with budgets which do not adhere to laws and laid down procedures when making budgets at the county levels,” said Mr Ruto.

He also said there was a need for a law to stipulate that recurrent expenditure must not exceed 40 per cent of total revenue at the disposal of either the national or the county governments.

This, he said, would free more resources for development and for the country at large to realise the benefits of devolution.

On claims that the national government was frustrating devolution, Mr Ruto said: “I want to assure that the national government has no intention or any plans to hold even a cent out of the Sh210 billion meant for the counties.”