Relief for counties as High Court deal frees funds

Fears of county governments running dry on funds were eased on Friday after the Controller of Budget agreed to release the money immediately.

The deal was sealed in the High Court by lawyers representing Members of County Assemblies, the Commission on Revenue Allocation and the Controller of Budget. Mr Justice Isaac Lenaola witnessed the signing of the consent which allowed the county governments to withdraw half of their budgets.

According to the consent order, Controller of Budget Agnes Odhiambo is to release 50 per cent of budget estimates for each of the 47 counties budget estimates for 2014/2015 Financial Year, pending hearing and determination of the petition.

“The funds must be released immediately to counties as per section 134 of the Public Finance Management Act in respect to County Budget Estimates for the 2014/2015 financial year,” reads the order.

Justice Lenaola directed the CRA and the Controller of Budget to file their responses before the hearing of the petition on August 29.

The development is a big relief to county governments which had warned that their operations may grind to a halt if the funds are not released in the next seven days.
MCAs from all the 47 counties challenged a directive by the Commission on Revenue Allocation curtailing their spending of billions of shillings.

Their lawyer, Prof Tom Ojienda, submitted that CRA and the Controller of Budget contravened the Constitution as they had no authority to direct how counties spent the funds.
“The mandate of CRA is only to recommend the basis for equitable sharing of revenue raised by the National Government to the devolved governments.

“The Controller of Budget is only mandated to ensure the funds are released and has no mandate deciding how the assemblies will use them,” Prof Ojienda said.

Last month, CRA issued a directive on budget ceilings to restrict spending by MCAs and assemblies following an outcry over wastage of public funds through allowances and foreign trips.

Under the new ceiling, the total cost for funding new structures under devolved units should not exceed Sh13 billion of the total amount allocated per year for the executives and Sh17 billion for the assemblies.

Curb misuse
The ceilings provided a limit of spending by county executives and county assemblies in a move meant to curb misuse of resources and cut down unnecessary recruitment at the county governments.

The suit seeks orders suspending the circular issued by the CRA and an order compelling the Controller of Budget to release county funds as per the 2014/2015 budgetary allocation for county governments.