• The Finance committee formula has been at the core of a standoff as it cuts allocations to 18 less populous counties by Sh17 billion.
• To minimise revenue losses, a policy brief states that if the proposal is adopted, no county will lose more than 10 per cent of its previous allocations.
Image: EZEKIEL AMING'A
Senators are likely to approve the House Finance and Budget committee's proposal on the third basis of revenue sharing among the 47 counties when they assemble on Tuesday.
This follows endorsement of the proposal by the Senate leadership comprising allies of President Uhuru Kenyatta and ODM boss Raila Odinga.
The proposal has been at the centre of a protracted dispute among the lawmakers.
“The formula proposed by the Senate Finance committee be adopted as the new basis for allocating revenue to counties,” a policy brief seen by the Star reads.
The brief was handed to the House leadership led by Speaker Kenneth Lusaka and will likely inform the debate and vote when the House convenes on Tuesday.
It recommends that the formula be implemented in a phased manner to avoid disrupting county plans and budgets and recommends a two-year moratorium.
The Finance committee formula has been at the core of a standoff as it cuts allocations to 18 less populous counties by Sh17 billion.
It provides for a 10-parameter formula, with the biggest weight placed on health (20 per cent) and basic share (also 20 per cent), population (16 per cent) and agriculture (12 per cent).
In a bid to ensure that revenue losses are minimised, the brief states that if the proposal is adopted, no county should lose more than 10 per cent its previous allocations.
“Counties whose revenues are bound to reduce as a result of the new formula should be cushioned (from Year 3) to avoid revenue shocks. A 10 per cent cushion against an agreed baseline (2020-21) [Sh316.5 billion] is proposed,” the leadership proposed.
If this is adopted, there will neither be a loser nor a winner as every county will get the exact allocation received in the 2019/20 financial year.
The committee proposes that the allocation this financial year should be based on the second generation formula and the 2009 population data.
The National Treasury projects that equitable share to counties will stand at Sh325 billion in the 2021-22 financial year.
The senators want the first Sh316.5 billion shared using the second generation formula and the 2009 population data while the balance of Sh9 billion should be subjected to the third generation formula.
The two-year moratorium would lapse in the 2022/23 financial year when the third generation formula would be operationalised.
The Treasury projects that the equitable share will have risen to Sh331 billion by then.
It is proposed that the third generation formula should apply fully, complete with the 2019 population census data at this stage.
Simulations developed by the senators show that 16 counties could experience a reduction in money from the equitable share. They say a 10 per cent cushion fund will be applied at this stage.
On Tuesday, Lusaka pushed the debate and vote on the formula to next week to allow for consensus building.
He ordered that a meeting of the leadership and a 12-member informal committee formed to strike a deal on the formula meet Thursday (yesterday) to iron out outstanding issues.
However, the Star learnt that the meeting did not take place.
The committee had presented two contradictory reports to Majority leader Samuel Poghisio and Minority leader James Orengo with a recommendation for a consensus on one.
“There are concessions we agree they should bring. If they bring those concessions, we can agree on one of the two options,” Nairobi Senator Johnson Sakaja, who co-chairs the committee with Bungoma Senator Moses Wetang'ula, said.
- mwaniki fm