Senators in crunch meeting on revenue deal

Despite sharp divisions, senators on Monday will hold a high-stakes meeting to strike a balance on the controversial third basis for sharing revenue among counties.

Speaker Kenneth Lusaka last Tuesday ordered a Kamukunji, or informal meeting, to discuss proposals ahead of Tuesday’s sitting.

That session will be the tenth in three months to attempt to debate and pass a formula.

The Kamukunji will be convened despite the fact that warring senators on Sunday maintained their handline stances that could once again scuttle consensus.

In general, the poorer sparsely populated counties would lose money to the more populous counties, though there are efforts to balance the formula and ease the pain in less developed counties.

Senate Majority leader Samuel Poghisio (West Pokot) and his Minority counterpart James Orengo (Siaya) are expected to communicate their decision to the members.

A 12-member informal committee formed to strike a deal on the formula failed to do so. It presented two contradictory reports to Poghisio and Orengo.

The committee recommended they seek further help in reaching a consensus from President Uhuru Kenyatta and ODM boss Raila Odinga.

The two proposals will set the basis of the discussion ahead of Monday's meeting. The Star has seen what are described as 'simulations' of the proposals.

One proposal is fronted by Team Kenya, a faction that opposes reduction of cash to any county. It calls for an eight-parameter formula, with the greatest weight placed on basis share (20 per cent),  health (18 per cent), population (18 per cent) and agriculture (10 per cent).

The proposal scraps counties' fiscal prudence and fiscal efforts as parameters for sharing revenue.

The formula recommends Sh273 billion of the Sh316.5 billion allocated to the counties in the budget be shared equally among all  47 counties.

It states that the remaining Sh53.5 billion be subjected to the parameters. It projects that in 2021-22, the Treasury would allocate the counties Sh325 billion, Sh331 billion in 2022-23 and Sh341 billion the next financial year.

The other proposal backed by senators supporting 'One Man, One Vote, One Shilling' provides 10 parameters.

It places the greatest weight on health (20 per cent), basic share (20 per cent), population (16 per cent) and agriculture (12 per cent). Sixteen counties would lose more than Sh15 billion in this proposal.

According to a policy brief seen by the Star last week, the senate leadership has endorsed the second proposal - albeit with a rider to defer implementation by two years and cushion the ‘losing’ counties.

“The formula proposed by the Senate Finance Committee be adopted as the new basis for allocating revenue to counties,” the brief reads.

It recommends the formula be implemented in a phased manner to avoid disrupting county plans and budgets and recommends a two-year moratorium.

To minimise revenue losses, the policy states 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.

The proposal, which is similar to the one fronted by the House Finance and Budget Committee, has been at the centre of a protracted dispute among the lawmakers.

Team Kenya has rejected the leadership position, setting the stage for fireworks in Monday's meeting that could escalate to Tuesday's sitting.

“As the committee that was formed to try and reach a deal, we submitted two reports to the leadership. They are yet to get back to us. We cannot support a formula that will take away billions from some counties,” Mandera Senator Mohamud Mohamed said.

“We are ready to vote. Let them bring the two proposals as we suggested if we cannot agree on a formula that will ensure equity,” Mohamed said. Mandera stands to lose  Sh1.2 billion under the proposal.

Minority Whip Senator Mutula Kilonzo Jnr (Makueni, a member of Team Kenya, said they would not accept any divisive formula.

“There is no committee formula on the table. It was amended. We will not accept a divisive formula, its consequences notwithstanding,” Mutula said.

Nairobi Senator Johnson Sakaja who co-chaired the 12-member informal committee, said the leadership is yet to inform the panel of its decision on the two reports the committee submitted.

“There are concessions we agree they should bring. If they bring those concessions, we can agree on one of the two options, based on the principles of equity that we agreed on. But either way, a decision must be made on Tuesday,” Sakaja, a member of Team Kenya, said.

Nandi Senator Samson Cherargei, a member of the One Man, One Vote, One Shilling faction, said they are ready to vote on the floor on the two proposals if they fail to agree in Monday's meeting.

“We are more than ready. Let them bring it,” he said.

(Edited by J. Muchangi)