Counties in financial limbo as deadlock on revenue bill persists
Stalemate between the two Houses means devolved units cannot receive cash to run their affairs.
- Deputy president William Ruto asked governors to shelve plans to move to court and embrace dialogue to end the Division of Revenue Bill stalemate.
- The Commission on Revenue Allocation, which is constitutionally mandated to make recommendations on the sharing of revenue, has had its proposals for county allocations consistently reduced by the National Assembly.
County governments will be unable to pay for drugs, water and electricity and run development projects starting tomorrow after negotiations between the national government and governors over sharing of revenue collapsed.
The Sunday Nation has learnt that governors, MCAs and senators have been fundraising for a legal battle over the Division of Revenue Bill 2019 stalemate and will move to the Supreme Court Monday.
On Saturday, Deputy president William Ruto, who chairs the Intergovernmental Budget and Economic Council (IBEC), asked governors to shelve plans to move to court and embrace dialogue to end the Division of Revenue Bill stalemate.
Speaking in Tharaka constituency after commissioning Tharaka Technical Training Institute, the DP said moving to court was not a solution because it was likely to deepen the stalemate.
“Both the national and county governments have waited for a long time to resolve the impasse and there is no need to start wrangles when a solution is about to be found,” he said.
Mr Ruto said he had already sat down with governors, Senate and the national government leadership and will next week have the Division of Revenue Bill published again to ensure that the money that the two levels of government will agree to share can be realised from local collection.
He said they could not share money that is not available and that both the national and county governments must appreciate that.
“I am certain that we will agree and there is no need to take the drastic steps of moving to court. I want to persuade county governments to wait because we already have a structured engagement between the counties, national government, the Senate and the National Assembly. That is what the Constitution anticipated; that there will be a discussion for the success of devolution,” the DP said.
As a result of the impasse, the counties have been unable to advertise tenders for development projects and will be unable to do so until a solution is reached.
Consequently, it means that there will be no expenditure at least in the first few months of the financial year 2019/20.
The projects planned by counties, which risk stalling, include improving maternal healthcare, building and maintaining roads, sponsoring various youth empowerment projects and funding the construction of polytechnics and early childhood education centres.
Council of Governors chairman Wycliffe Oparanya said the standoff risks stalling operations at the grassroots.
“The public needs to be aware that even though the counties are ready to serve them, they are unable to do so due to lack of funds to support effective and efficient service delivery,” Mr Oparanya said.
Laikipia governor Ndiritu Muriithi sees the stalemate as the biggest threat to devolution since it began in 2013.
“If the budget is implemented without an agreement on Division of Revenue, we will set a precedent that will eventually kill devolution as MPs can decide to defund counties even next year. That is how devolution was killed in the 60s. Kenyans need to resist this,” said Mr Muriithi, an economist.
In health, Mr Oparanya said counties expect to experience challenges in payment for commodities from the Kenya Medical Supplies Authority (Kemsa) and other suppliers.
The legal showdown stems from failure by the National Assembly and the Senate to reach a compromise on the legislation, which provides a basis for sharing out national revenue between the two levels of government.
The challenge with the lack of agreement is that the end of the financial year came in June without an appropriate mechanism for the counties to budget and appropriate money since their budgets are based on the Division of Revenue Bill allocations.
The Sunday Nation has learnt that the county bosses agreed earlier this week to have the courts arbitrate in the severely contested matter as the both the National Assembly and Senate representatives in the mediation talks maintained hard-line positions.
The Commission on Revenue Allocation (CRA), which is constitutionally mandated to make recommendations on the sharing of revenue between the two levels of government, has had its proposals for county allocations consistently reduced by the National Assembly.
Unlike the Senate, the latter has always adopted the National Treasury proposals, which always tend to be grossly lower than the CRA proposals.
This year has been no different and the National Treasury and the National Assembly have proposed to lower the county governments’ allocations to even below the 2018 level.
Senators’ decision to increase counties vote from Sh371.6 billion to Sh391.6 billion, with Sh335.7 billion as equitable share instead of Sh310 billion in line with National Treasury proposal, was overturned by the National Assembly.
After initial negotiations, the National Assembly wanted counties to get Sh316 billion while the Senate proposed Sh327 billion, with each of the parties refusing to cede ground.
“The council together with the Senate and MCAs will tomorrow jointly file an advisory at the Supreme Court on the legal issues arising from the DoR Bill 2019. The delegation will converge at the Supreme Court and thereafter match to KICC for a meeting with the members of the civil society,” the governors said.
“The functions allocated to counties mean the most to the local mwananchi because they directly affect them. The National Assembly should stop playing around with the DoR Bill 2019,” Kisumu Governor Prof Anyang Nyong’o warned.
Bungoma Governor Wycliffe Wangamati said the habit of punishing county governments for acts that are unrelated to them is injurious to devolution and must cease, adding that the courts must resolve the issue once and for all.“ The moment you deprive counties of resources then you kill devolution,” he said.
Mandera Governor Ali Roba faulted President Uhuru Kenyatta for signing the Appropriation Bill 2019 before the stalemate over the DoR was resolved.
The DoR must be in place before the appropriation bill is finalised. “We know it’s an illegality, and the only way to resolve this issue is legal redress,” Mr Roba said.
Additional reporting by Alex Njeru