Treasury say it can’t meet Senate demand for more cash

Treasury has said it will not meet the Senate’s demand to increase funding to counties without eroding the allocations made to the national government.

Intergovernmental fiscal relations advisor, Mr Albert Mwenda, said an increase in the county allocations would have to be matched by a decrease in allocations made to the central government.

“Because there is no scope for more revenue and there is no scope for more borrowing under the current fiscal framework, the only option is to reduce expenditures of the national government and transfer the funds to county governments,” said Mr Mwenda.

He was speaking during a public forum hosted by the Institute of Economic Affairs (IEA) and the International Budget Partnership (IBP) to discuss the Division of Revenue Bill, 2013.

Last month, the Senate sparked a quarrel with the National Assembly after it amended sections of the Bill.

The National Assembly had approved allocations of Sh210 billion to county governments.

Once it got its hands on the proposed legislation, the Senate increased the allocations by Sh48 billion arguing that without this, at least 18 counties would be forced to borrow to plug funding gaps that could cripple service delivery.

Bill changes

The allocations are based on the government’s most recent audited revenues, which were collected in the 2010/2011 financial year.

Of the shareable revenue, the national government is expected to get at least Sh662 billion. The Bill is now back with the National Assembly for deliberation on the changes made by the Senate.

In a rejoinder, the chairman of the Senate’s Committee on Finance, Commerce and Economic Affairs, Mr Billow Kerrow, said that Treasury could raise the needed funds through rationalisation of expenditure in various bloated ministries.

He warned that underfunding the county governments could result in chaos as service delivery would be interrupted.

He added that the funding was crucial if the national government was to portray its commitment to devolution.

Data questioned

“They should not make the mistake of underfunding the county governments because the result would be a crisis,” said Mr Kerrow.

Participants in the forum questioned the data used by the Treasury in developing a costing formula for service delivery among the counties. 

The Treasury is yet to make this data public and Mr Kerrow raised concerns that using historical data could perpetuate a service delivery system that has marginalised large segments of the population.

In May, the Commission of Revenue Allocation chairman, Mr Micah Cheserem, raised similar concerns saying that no government agency, including the Treasury, had carried out proper costing for devolved governments.