Governors, National Treasury face off over Sh140 billion county allocation gap
Council of Governors Finance Committee Chairman Fernandes Barasa stressed that counties require Sh547 billion to meet their obligations.
A dispute is unfolding between the national and county governments over the allocation of revenue for the 2025-26 financial year, with the two sides differing by over Sh140 billion.
The Council of Governors (CoG) insists that counties must receive no less than Sh547 billion, while the National Treasury has proposed an allocation of Sh405 billion.
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The Treasury’s proposal represents an increase of only Sh17.6 billion from the current financial year, where counties settled for Sh387 billion following adjustments after the withdrawal of the controversial Finance Bill 2024.
However, the Commission on Revenue Allocation (CRA) has suggested that counties should get at least Sh417.4 billion, a figure higher than what the Treasury is offering but still far below the governors’ demand.
While appearing before the Senate Finance and Budget Committee, CoG Finance Committee Chairman Fernandes Barasa stressed that counties require Sh547 billion to meet their obligations.
Supporting this position, the Senate committee chairperson Ali Roba accused the national government and the National Assembly of working together to deprive counties of their rightful share of revenue.
“This situation is deliberate and deceitful because the national government insists on working with the audited and approved accounts for the 2020/2021 financial year, yet they have the one for 2023/2024. The National Assembly is part of the plan,” said the Mandera senator.
“Some Sh29.7 billion has been taken away cleverly from counties and given to MDAs. This means we are dealing with people who are not keen on devolution, added Kakamega Senator Boni Khalwale.
CRA deputy chairperson Koitamet Olekina also sided with the governors and senators, citing the 2025 Budget Policy Statement which projects an increase of Sh259.1 billion in shareable revenue, from Sh2.57 trillion in the 2024-25 financial year to Sh2.83 trillion in the coming period.
Olekina argued that the national government should take Sh2.4 trillion, while counties should receive Sh417.4 billion, with Sh7.85 billion allocated to the Equalisation Fund.
“The commission therefore submits that the provision to allocate 47 county governments an additional Sh17.6 billion for the financial year ending June 2026 does not amount to equity in the sharing of nationally raised revenues,” he said.
Non-discretionary financial obligations
Governors have also raised concerns about non-discretionary financial obligations amounting to Sh73.78 billion, which they argue should be part of their allocation.
These obligations include Sh39 billion for new medical equipment, Sh4.05 billion for housing levy payments, Sh6 billion for National Social Security Fund contributions, and Sh11.75 billion for County Aggregated Industrial Parks.
CoG Chairperson Ahmed Abdullahi emphasised that the budget must account for the rising costs of running counties.
“In the IBEC (Intergovernmental Budget and Economic Council), we tabled Sh547 billion because of the projected growth in the economy and funds meant for devolved functions,” he said.
The governors further criticised the national government for allocating funds to functions that fall under county jurisdiction.
Ahmed pointed out allocations such as Sh7.2 billion for hospital infrastructure, free maternity programmes, and procurement of reproductive health commodities under the Ministry of Health.
Kisii Senator Richard Onyonka dismissed some of these allocations as misplaced.
“I have looked at the table you have provided, and I can quickly say that these are budgeted corruptions of Sh29 billion. These are the things that make us make noise outside there,” he said.
The governors now want Parliament to pass the County Additional Allocation Bill without the Roads Maintenance Levy Fund (RMLF) component to unlock billions for development.
They insist that county funding should grow in line with GDP and ordinary revenues, just as is the case for the national government.
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