- The emergency meeting comes a week after legislators rejected the current basis for revenue allocation.
- The meeting will discuss how Nairobi’s allocation will be handled in the wake of the transfer of key functions to the national government.
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Senators and the Commission on Revenue Allocation will Thursday meet to strike a deal on the third formula for revenue sharing among counties.
The emergency meeting comes a week after legislators rejected the current basis for revenue allocation, terming it obsolete.
The meeting planned for Bomas of Kenya will discuss how Nairobi’s allocation will be handled in the wake of the transfer of key county functions to the national government.
Nairobi Governor Mike Sonko signed away four critical county functions to the national government in a ceremony presided over by President Uhuru Kenyatta at State House on February 25.
They are health, transport, planning and development and public works and utility services.
Senate Deputy Speaker Kithure Kindiki on Tuesday informed the House that the committee on Finance and Budget had organised a half-day consultative retreat with the CRA to resolve contentious issues that have delayed the passage of the plan.
The Jane Kiringai-led commission is mandated by law to recommend the basis for equitable sharing of revenue raised nationally between the national and the county governments and among the county governments.
“In compliance with the directive of the chair, the Standing Committee on Finance and Budget, in collaboration with the Commission on Revenue Allocation, has organised a meeting for all senators to discuss the proposed third basis for revenue sharing among county governments,” Kindiki said.
A fortnight ago, the House passed the Division of Revenue Bill 2020-21 enabling Sh316.5 billion to be allocated to counties.
However, the third generation revenue sharing formula, which is supposed to guide revenue sharing between counties, is yet to be finalised more than a year after the commission sent it to the Senate.
The proposed formula, which has adopted a sector-specific funding approach, was committed to the Finance and Budget committee led by Senator Mohamed Mahamud (Mandera) to scrutinise and table an improved version in the chamber for adoption.
The committee, however, has never tabled its report on the formula.
Last Tuesday, the legislators rejected the current formula and demanded a new one be put in place.
They halted the process of approving the County Allocation of Revenue Bill, 2020 – the law that splits cash allocated to the 47 counties – until a new method was tabled.
“I want to ask that you (Speaker) to rule on whether, despite the provisions of the Constitution and the fact that it is the same Committee that has sat on the formula for many months, we should proceed with this Bill,” Nairobi Senator Johnson said.
Article 217 of the Constitution stipulates that the revenue-sharing formula be reviewed every five years.
However, the Sixth Schedule of the Constitution further provides that the first and second determinations of the basis of the division of revenue among the counties were to be made at three-year intervals.
The last formula was reviewed five years ago.
The first and second formulas considered population, basic equal share, poverty, land area, development, personnel emolument and fiscal responsibility in sharing of revenue.
The proposed formula, however, places weight on the performance and pressure of the population on specific sectors, fiscal discipline, accountability and revenue performance.
For instance, health sector has been assigned 15 per cent. The commission combined the uninsured, inpatient and outpatient parameters to come up with the index.
In the agriculture sector, it arrived at the expenditure needs through the total number of rural households with regard to extension services and food security to determine the proposed 10 per cent weight.
Population has been weighted 18 from 45 in the current formula, while poverty has a weight of 14 from the current 18.
Sakaja said that many counties, including Nairobi, had been disadvantaged by the current approach and demanded a new method to use for allocating funds from next financial year.
“Even if they want to bring the same formula, let them do so and let us consider a formula for sharing revenue. There is no other more serious work that a senator has apart from determining the manner in which our counties shall divide money,” he said.
Edited by Henry Makori