Governors scored a minor victory in their quest for additional funding to run counties after they were allocated Sh376.4 billion in the 2018/19 financial year.
The county funds comprise a sharable revenue of Sh314 billion up from Sh302 billion this year which translates to about a four per cent increase, budget proposals by Treasury Cabinet Secretary Henry Rotich indicate.
Conditional grants allocations amount to Sh62.4 billion. The allocations in 2018/19 translates to 40 per cent of most recent audited revenues which is in ex-cess of the constitutional threshold of 15 per cent.
“This will be in addition to funds provided under CDF and National Government Affirmative Action Fund, which as we all know goes to the grassroots, in addition to funds appropriated from the Equalisation Fund,” Mr Rotich announced.
According to John Kinuthia, the lead research analyst at International Budget Partnership, shareable revenue to the counties has been high in previous years.
“The sharable revenue of Sh314 billion up from Sh302 billion this year is a mini-mal increment and a negative for the counties. This means that out of the local revenue collected locally, a majority of it remains with the national government at the expense of it being shared more equitably between the two levels of government,” Mr Kinuthia said.
Specific projects to be funded from the Equalisation Fund will be made public as soon as the Commission on Revenue Allocation develops the second policy on marginalised areas.
However, the fact that counties are overwhelmingly relying on national government for funding as they fail to meet local revenue targets did not escape the mention by the CS who said his ministry has finalised a policy to support the enhancement of county own source revenue.
Also, the County Governments Revenue Raising Regulation Process Bill, 2018 from the ministry provides for regulation of the process of introducing new taxes, fees and charges by county governments.
It is intended to address the concerns of double taxation as goods and services move from one county to the next and is consistent with Article 209 of the Constitution which prohibits revenue raising measures which impede the movement of goods and services within Kenya.
Counties have also been sagging under massive debts as pending bills grew from Sh37.8 billion in 2014/15 financial year to Sh37.3 billion in 2015/16 to peak at Sh96.5 billion last June.
CS Rotich stated such debts shall be subjected to verification and a majority of the counties have already complied.
“Once authenticated, the arrears shall be included in the budget as a first charge on the respective county revenue funds as required under the Public Finance Management (County Governments) Regulations, 2015. I urge county assemblies and Parliament to assist us by enforcing this agreement,” Mr Rotich said.