The Mediation between Kenya National Assembly and Senate on division of Revenue bill 2017 has collapsed.
Article 218 (1) (a) of the Constitution provides that at least two months before the end of each financial year, a Division of Revenue Bill shall be introduced in Parliament, which shall divide revenue raised by the national government, among the national and county governments. Article 218 (1) (b) provides for the introduction of a County Allocation of Revenue Bill, which shall divide among the counties the revenue allocated to the county level of government.
On February 15, the National Assembly, pursuant to Article 218 (1) of the Constitution, allocated Sh323.8 billion for the 2017-18 financial year through it. However, on March 1, the Senate, through powers granted under Article 217 (8), passed a resolution increasing allocation to counties to Sh352.8 billion, contrary to what the National Assembly had given the counties.
The Senate Finance Committee further recommended that the Senate adopt a conditional allocation of Sh38 billion, including allocations from loans and grants amounting to Sh5.5 billion. This position was in line with proposals by Commission on Revenue Commission and the Council of Governors.
After consideration, however, the National Assembly did not adopt Senate’s resolutions to increase funds allocated to counties by Sh29 billion. Since the Division of Revenue Bill is a special proposal concerning county governments within the meaning of Article 111, a mediation committee of both Houses of Parliament was formed as required by Article 113 to attempt to pass, within 30 days, a version of the bill that both Houses would pass.
The mediation committee could adopt either of these four options: Take the drastic action of allowing the bill to collapse by failing to reach a consensus, take the National Assembly's option of giving counties the Sh323.8 billion, consider the Senate's position of increasing allocation to Sh352.8 billion or both teams cede ground and meet at the middle by giving the devolved units Sh26 billion addition.
The 30 days within which the mediation committee was expected to adopt a version of the bill expired on or about May 4. Should there have been no consensus on the bill at the end of the 30 days, counties would face the prospects of a financial crisis since without a Division of Revenue Bill, there would be no County Allocation of Revenue Act spelling allocation among the 47 counties.
If no consensus is reached by the committee of the two Houses, the bill will fail as per Article 113 (4) of the Constitution which provides: “If the mediation committee fails to agree on a version of the Bill within 30 days, or if a version proposed by the committee is rejected by either House, the Bill is defeated.”
If the Bill is lost, it would give rise to a situation that would put funding for counties at a dilemma. Article 224 provides: “On the basis of the Division of Revenue Bill passed by Parliament under Article 218, each county government shall prepare and adopt its own annual budget and appropriation Bill in the form, and according to the procedure, prescribed in an Act of Parliament.”
Given the degree of importance of a Division of Revenue Bill, the mediation committee would have to move back to the whole House to debate the Bill afresh. This may be the only option as the Constitution is silent on what happens in the event of such a stalemate. A reintroduction of the Bill may, therefore, be the only recourse available.
Given that end of the financial year is still approximately two months away, the Bill could be reintroduced afresh and debated in Parliament, depending on the calendar of the Parliament. Upon publication of a new Bill, the Council of Governors can petition the National Assembly pursuant to the provisions of Standing Order 120 and Standing order 125 of the Senate to reduce the publication period of the new bill to shorten the debating period.