CRISIS

Counties face cash crunch as Senators, MPs differ over bill

Senators maintained that counties be allocated Sh327 billion but MPs propose Sh316 billion.

In Summary

•The MPs and Senators refused to cede ground, with each camp maintaining their hard-stance on the amount to be allocated to the counties

•The bill is crucial legislation that spells out the sharing of revenue between the national and county governments for the 2019-20 financial year starting on July 1

Members of parliament and senate at the parliament gallery during the opening of the 11th parliament.
Members of parliament and senate at the parliament gallery during the opening of the 11th parliament.
Image: MONICAH MWANGI

Counties are at the mercy of Treasury CS Henry Rotich after talks to decide the amount to be allocated to the devolved units in the budget collapsed.

The governors will be praying that the CS releases an overdraft to the counties, to save them from financial problems that could disrupt their operations.

Members of the mediation committee drawn from the Senate and the National  Assembly yesterday differed sharply during a meeting held only hours before Rotich unveiled the 2019-20 budget.

The MPs and Senators refused to cede ground, with each camp maintaining a hard-line stance.

Senators maintained that the counties should be allocated Sh327 billion while MPs insisted that the devolved units get Sh316 billion in the Division of Revenue Bill.

The bill is a crucial legislation that spells out the sharing of revenue between the national and county governments for the 2019-20 financial year that starts on July 1.

The stalemate implies that the counties will not get funds from the National Treasury until a new Bill is drafted and re-introduced in the two houses.

Yesterday, Senators walked out on MPs in protest during the session, accusing them of highhandedness.

“We walked out because they were taking us for a ride. We cannot sit with people who are not negotiating in good faith.” Makueni Senator Mutula Kilonzo Jr said.

Mutula said Senators could not cede ground further considering the level of inflation experienced in the last year.

“They are asking us, ‘where will you get that money’, I mean, how can they ask us that?” Mutula asked.

Narok Senator Ledama Ole Kina was the first to walk out in a huff, lamenting the MPs ‘bossy and rogue mentality.’

“Yes, we walked out. We cannot be ceding ground all the time as others brag,” Ledama told the Star.

The Senators said that the budget unveiled by the CS was illegal as the exercise violated the provisions of the Public Finance Management Act, 2012 that stipulates that the Division of Revenue Act must be in place before the budget is read.

“What the CS is coming to do is an illegality because there is no law in place to guide the allocations to the two governments,” he said.

But Majority leader Aden Duale, who sat in the mediation team, said that the reading of the budget was legal as CS only unveiled budgets for the Judiciary, Parliament and the National Government.

The Garissa Town MP downplayed the assertion that the counties will be plunged into a cash crisis, saying the Treasury CS will advance an overdraft to the counties until the Bill is passed.

“What happens now is that CS Treasury will read the budget for the Judiciary, PSC and National Government. What happens to county government is that the CS can administratively give overdrafts to counties until we pass another division of revenue,” he said.

He said they will ask National Assembly Speaker Justin Muturi to invoke his powers to order a republication of the Bill today.

Ordinarily, when a bill flops, it can only be re-introduced in Parliament after six months.

“I can tell you without any fear of contradiction that tomorrow we will ask the speaker to use his powers under Standing Order one to publish the Bill. We will introduce it next week in the house,’ he said.

Duale faulted the Supreme Court ruling that Senators must have an input in the vertical division of revenue between the counties and the National Government.

He said that the MPs insisted on giving the Counties Sh316 billion, up from an earlier figure of Sh310 billion, because of the revenue shortfalls.

“We have taken deliberate action to reduce the budget deficit. Close to Sh800 billion is going to servicing of debt,” he said.

Minority Leader John Mbadi said the deadlock has put the country in an unfortunate position as there will be no Division of Revenue Act 2019-20.

“The failure also means counties are staring at a bleak future as there will be no legal basis of giving counties the much-needed funding,” he said.

According to Mbadi, the only option available for counties is for Rotich to release an advance to help run their operations.

“We agreed on every other thing but failed to agree on that one aspect.  We got stuck at Sh 316 billion and Sh 327 billion proposed by the Senate. We will report back the failure to the House,” Mbadi said.

“We told them that problems affecting counties are not budget allocation but the delay in disbursement. What Senate should do is to push for timely disbursements to the counties.”

The minority leader also blamed the Senate’s mediation side of coming to a negotiation table with a fixed mind.

“Next time, when it comes to mediation on a money issue the Senate should give us some people with financial background. Budget is not a legal issue,” added the Suba South legislator.