Showdown looms as Senate approves Sh465 billion for counties

The Senate has unanimously approved a Sh465 billion allocation for county governments in the 2025 Division of Revenue Bill, setting the stage for a new round of mediation with the National Assembly, which had earlier endorsed a lower figure of Sh405 billion.

The difference in the proposed figures has revived a familiar tug-of-war between the two Houses, potentially delaying the budget process and raising fresh concerns over the future of devolved functions.

The Senate’s version of the Bill was championed by the Finance and Budget Committee, whose vice chairperson, Tabitha Mutinda, said counties are currently burdened with heavy non-negotiable financial obligations imposed by national directives.

“These counties are being forced to shoulder non-discretionary expenditures amounting to Sh34 billion, imposed by national government directives,” Mutinda said.

She listed Sh4.1 billion for the Housing Levy, Sh6 billion for the National Social Security Fund, Sh11.8 billion for County Aggregated Industrial Parks, and Sh3.23 billion for community health promoter payments among the mandated costs.

Other obligations include Sh6.3 billion for annual wage increments under the Integrated Payroll and Personnel Database and Sh3.5 billion for doctors’ salary increments tied to the 2017 Collective Bargaining Agreement and return-to-work deals.

Senate Majority Leader Aaron Cheruiyot supported the increase but expressed concern about how counties spend their money.

“About 34 out of 47 counties spend more than 50 per cent of their shareable revenue on recurrent expenditure,” he said.

“Less than 10 counties allocate more than the statutory 25 per cent on actual development,” he added, referencing the Public Finance Management Act.

Cheruiyot questioned the justification for increasing county allocations when most of it is used on payrolls.

“It makes no sense to fight for Sh400 billion or Sh450 billion for counties when 90 per cent of that money is misappropriated. Why should we send that much if over half of it is used to pay 300,000 to 400,000 people, excluding millions of others?” he asked.

In a dispatch accompanying the Bill, National Assembly Speaker Moses Wetang’ula defended the Sh405 billion figure passed by MPs.

He said it reflects current revenue performance and includes an increase of Sh17.6 billion for the 2025/26 financial year.

“This figure was guided by the government’s commitment to a fiscal consolidation plan aimed at reducing the fiscal deficit to 4.3 per cent of GDP. This is intended to slow the accumulation of public debt, improve the primary surplus, and enhance fiscal sustainability,” Wetang’ula said.

He added that global economic disruptions, supply chain issues, and rising US interest rates had contributed to reduced revenue, impacting the country’s financial flexibility.

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Wetang’ula also noted that counties have continued to receive their full allocations even when the national government suffers revenue shortfalls.

“Article 218(2)(b) of the constitution requires that revenue sharing between the two levels of government consider criteria outlined in Article 203(1), including national interest, public debt and the needs of disadvantaged areas,” he said.

Senate Chief Whip Boni Khalwale supported the enhanced allocation, saying the Sh465 billion proposed for counties and Sh2.231 trillion for the national government offered a fair distribution of available resources.