Counties slapped with Sh20bn budget cut as Ruto declines to sign Revenue Bill

Several county governments are set to receive Sh20 billion less than anticipated, dropping their total allocation below Sh385 billion for the 2023/24 Financial Year.

The reduction, the highest since the start of devolution, follows President William Ruto's decision to withhold his signature from the County Allocation of Revenue Bill, impacting the previously proposed Sh400 billion allocation.

In his memorandum to the Senate, President Ruto declined to sign the County Allocation of Revenue Bill, citing the failure to enact the Finance Bill, 2024, necessitating the re-organisation and rationalisation of the government's financial arrangements for the current financial year.

"Now therefore, in exercise of the powers conferred on me by Article 115 (1) (b) of the Constitution, I decline to assent to the County Allocation of Revenue Bill, 2024 and refer the Bill for reconsideration by the Senate," Ruto said.

"I recommend that the Bill be amended by deleting the First Schedule and replacing it with a Schedule that is attached to the Memorandum."

He explained that the withdrawal of the Finance Bill 2024 would result in a budget deficit, with no additional taxation mechanism to finance the Sh3.9 trillion FY2024/25 budget.

The new figure is Sh5 billion less than what county governments received in equitable share in the last financial year and Sh20 billion less than what they had already been allocated in the current fiscal year.

Revised allocations

In the revised allocations, Nairobi County will now receive Sh19.8 billion, instead of the Sh20.9 billion that it was set to receive, losing up to Sh1.1 billion.

Turkana County will lose up to Sh700 million, receiving Sh12.95 billion instead of the initial allocation of Sh13.63 billion.

Kiambu County initially allocated Sh12.71 billion, will now receive Sh12.04 billion, while Mandera County will receive Sh11.47 billion, Sh600 million less than its initial allocation.

Nakuru County stands to lose more than Sh750 million, from the initial Sh14.13 billion allocation to the revised Sh13.39 billion.

Bungoma County, which was poised to receive Sh11.54 billion, will now receive Sh10.95 billion, a difference of Sh750 million. Kilifi County, initially allocated Sh12.5 billion, will lose Sh600 million, only receiving Sh11.9 billion.

Marsabit County, which was to receive Sh7.8 billion, has now been allocated Sh7.4 billion, a Sh400 million reduction. Trans Nzoia County, which was to receive Sh7.79 billion, will now receive Sh7.3 billion, also losing a similar amount.

Murang'a County, which was set to get Sh7.7 billion, is likely to lose Sh400 million as it is allocated Sh7.3 billion in the revised estimates.

Busia County, which was to receive Sh7.76 billion, will have to make do with Sh7.3 billion in the new proposals. Nandi County, which was to receive Sh7.6 billion, is set to lose Sh500 million, ending up with Sh7.1 billion.

Siaya County, set to receive Sh7.5 billion, will now receive Sh7.1 billion, a Sh400 million reduction if the Senate accedes to the President’s proposals.

Senate Speaker Amason Kingi referred the memorandum to the Senate Finance and Budget Committee, chaired by Mandera Senator Ali Roba, and directed the committee to expedite the matter to unlock funds for counties.

The Roba-led committee has until Thursday, July 18, to table its report for consideration by the Senate.

Either House will have to marshal two-thirds of its members—a near-impossible task—to overturn the President’s memorandum.

“The Houses of Parliament shall either, by a majority vote, amend the Bill in light of the President’s reservations or, by a vote supported by two-thirds of members of each House, pass the Bill a second time without amendment or with amendments that do not fully accommodate the President’s reservations,” reads Article 115 of the Constitution.

The reductions in county revenues are likely to affect the operations of county governments in this financial year.