Post-Covid-19 county budgets must prioritise health coverage

County governments are preparing the budgets for the coming financial year.

Fiscal strategy papers already circulated indicate that most counties are taking a business-as-usual approach, oblivious to the devastating effects of Covid-19 on the economy.

This exposes the weaknesses of the National Treasury in its advisory responsibility to Parliament and the county assemblies.

In February, the Treasury presented a Budget Policy Statement that did not consider the possible effects of the pandemic on the economy. The counties followed suit and developed fiscal strategy papers.

Admittedly, the impact of the pandemic was not clear then. Now that a picture is beginning to form, it’s irresponsible for the Treasury to sit and watch as legislators appropriate funds that are likely to be unavailable.

It will be a miracle if the economy grows by more than one percentage point and near impossible for the Kenya Revenue Authority to meet its target.

Other issues like debt rescheduling have been proposed, but not firmed up. If the breadwinner loses their job, adjustments must be made.

HEALTH ALLOCATION

Counties are set to receive Sh316 billion as equitable share and Sh53 billion as conditional grants, some of them loans.

Due to anticipated revenue shortfalls, I expect the Executive to request an alteration to this amount despite safeguards in the Division of Revenue Act.

Counties’ own source revenues will fall by 30 per cent drop from last financial year’s Sh40 billion because of a depressed business environment.

Due to the pandemic, county budgets must be completely restructured to focus on “lives and livelihoods”. More resources must be allocated to health, a devolved function.

Despite the billions the sector receives yearly, the combined pre-coronavirus intensive care bed capacity was just 518 for 47 million Kenyans.

From a financing perspective, counties should allocate at least 15 per cent of expenditure to health, up from seven per cent.

On execution, they should develop health infrastructure, human resources and processes for effective primary care and efficient response to pandemics.

There are other low-hanging fruits that can be implemented immediately. Foreign and domestic travel should be reduced aggressively and the funds reallocated to productive sectors.

Allocations to county assemblies have been rising, to over 12 per cent of revenue in some counties. It’s time to take this back to the seven per cent envisaged in the public finance management regulations.

PENDING BILLS

Prestige projects like county headquarters, governors’ mansions and speakers’ homes should be frozen.

Social media has been abuzz with the new Machakos County headquarters, an imposing palace in a region with only five ICU beds.

The new fad in prestige projects should be hospitals, strong agricultural value chains, revived cooperatives, public infrastructure and youth employment ventures.

Pending bills remain unresolved in most counties. I would support the Treasury to withhold disbursements to offending counties. The State should also prosecute the authors of fictitious bills.

County assemblies should come up with citizen-friendly finance bills that will provide appropriate incentives and tax breaks.

To promote trade in agricultural products, intra- and cross-county cess should be reviewed or abolished.

The multiple taxes needed to run a business should be removed and the single business live up to its name.

That may reduce own source revenue but it would ease pain and suffering and spur additional economic activity.

In balancing budgets, counties should reduce operational expenses to 15 per cent, reduce assembly allocations to seven per cent and maintain employee costs at 35 per cent or below.

This could free up 40 per cent to development. This is not the time to retrench workers but to cut wastage.

Kenya being a unitary state, it behoves the Treasury to guide the counties on the debilitating impact of the coronavirus. It cannot be business as usual.

Mr Kajwang’, the Homa Bay County senator, is a past chairman, Senate Committee on Public Accounts and Investments. [email protected].