Governors who collect more revenue will be rewarded with a bigger share from the national government, according to a new formula to be used to distribute money to counties in the next financial year.
Senators on Thursday struck a deal with the Commission on Revenue Allocation over the new formula after lengthy deliberations that began last December.
The formula puts emphasis on rewarding counties that collect higher local revenue and also increases funds to be equally shared by the counties.
Two per cent of the allocated money will be shared as per local revenue collected.
The devolved units will also get some share as per their rates of development.
The new formula, to be tabled in the Senate, still maintains that the largest share be divided according to population.
The Constitution tasks the CRA with coming up with a formula for shareable revenue every five years.
The Senate Finance Committee chaired by Mandera Senator Billow Kerrow was tasked to find a common ground with the CRA before tabling the new formula after another was rejected last year.
On Thursday, the committee called other senators to a meeting with the commission at Radisson Blu Hotel in Nairobi where they were briefed on the new formula.
According to the blueprint, 45 per cent of shareable revenue will be distributed according to population as per the 2009 census, 26 per cent will be shared equally, 18 per cent according to poverty level, eight per cent, land area, two per cent, fiscal responsibility, and one per cent takes account of the development factor.
“I am happy the senators approved this formula. Once passed, it will be used over the next five years, but they can still amend it with the support of two-thirds of the members,” said CRA Chairman Micah Cheserem.
Mr Kerrow said senators dropped their tough stance after their proposals were incorporated.
“It is not going to satisfy every county in terms of resources. We have made compromises and hopefully the formula will be passed in the House,” said Mr Kerrow.
Other senators welcomed the formula saying their concerns had been considered.