Senators reject Sh20 billion cut to county allocation

President William Ruto and National Treasury Cabinet Secretary John Mbadi may need to revisit their budget plans after senators vowed to reject proposed cuts for counties.

The national government plans to reduce county funding by Sh20 billion, from Sh400.1 billion to Sh380 billion for the current financial year.

This proposal follows the withdrawal of the controversial Finance Bill, 2024, which resulted in an estimated loss of Sh350 billion in revenue for the government.

During a meeting with CS Mbadi over the new Division of Revenue Bill, 2024, members of the Senate Finance and Budget Committee led by Senator Ali Roba (Mandera) rejected the Treasury's plan.

"Our position is, don't touch money to counties. To reduce money from the national government but don't interfere with county funds," echoed Kisii Senator, Richard Onyonka.

Nominated Senator Tabitha Mutinda asserted that the committee cannot recommend funding lower than what counties received the previous year.

She accused the Treasury of prioritising national government needs over county requirements.

"Are you only concerned about expenditure at the national level?" Mutinda posed.

Senator Roba highlighted that counties received Sh385 billion in the last fiscal year and argued there is no justification for accepting a lower amount.

Additional financial pressures

He pointed out that counties are facing additional financial pressures, including Sh39.98 billion for mandatory expenditures imposed by the national government.

These include a Sh4 billion housing levy, Sh3 billion in increased National Social Security Fund (NSSF) contributions, and Sh5.3 billion for county industrial parks.

Counties will also have to manage payments for community health promoters totalling Sh3.23 billion, Sh5.64 billion for medical equipment services, and Sh2.85 billion for the Integrated Payroll and Personnel Database.

Additionally, Sh5.8 billion has been earmarked for the doctors' Collective Bargaining Agreement (CBA) that runs until 2024.

Senator Roba also criticised the national government's borrowing practices.

"How do you expect counties to deal with all the above projects?" he posed.

The lawmaker expressed frustration over the government's historical borrowing for trivial reasons while failing to secure adequate funding for counties.

In defense of the budget cuts, CS Mbadi explained that the reductions stem from a projected ordinary revenue shortfall, which decreased from Sh2.9 trillion to Sh2.6 trillion after the Finance Bill was withdrawn.

He stated that the government would not take on new debt to restore funding to Sh400.1 billion, noting that the national government has absorbed 93.6 per cent of the austerity measures, leaving counties with only 6.4 per cent.

The National Treasury boss shared that out of the Sh2.63 trillion working budget, Sh1.1 trillion is allocated for debt servicing.

Additionally, Sh190.4 billion goes to non-discretionary expenditures, while Sh750 billion is dedicated to salaries and wages, leaving just Sh531 billion for other government programs.

Despite Mbadi's explanations, the senators remained resolute.