- The National Treasury could be forced to look for alternative ways to raise funds to realise the Sh370 billion equitable share for counties in 2021-22
- Senators have rejected a plan by Treasury CS Ukur Yatani to convert some Sh9.7 billion meant road maintained levy funds from conditional grant to unconditional
Image: /FREDERICK OMONDI
The National Treasury could be forced to look for alternative ways to raise funds to realise the Sh370 billion equitable share of revenue for counties in 2021-22.
Senators have rejected a plan by Treasury CS Ukur Yatani to convert some Sh9.7 billion meant for road maintaince levy from conditional grant to unconditional and make it part of the equitable share.
“We have raised issues with the conversion of road maintenance levy because that fund was created by an act of parliament and conversion will require some changes to the law,” Senate’s Finance and budget committee chairman Charles Kibiru said.
The fund was introduced in 2014-15 and advanced to the counties as a conditional grant to enhance and sustain county government’s capacity to repair county roads. It was created by the Kenya Roads Board Act.
The fund is among the four conditional grants that the Treasury has planned to convert to realise Sh370 billion equitable share for the devolved units in the current financial year.
Combined, the funds would generate Sh17.3 billion for the devolved units.
Others are village polytechnic grants that was introduced in 2015-16 to support the county governments in equipping technical and vocational centres and capitation of student fees. It has had an allocation of Sh2 billion annually since it was introduced.
The Treasury is also seeking to convert some Sh4.7 billion grant meant for Level 5 hospitals to unconditional. The funds are meant to compensate counties for the costs incurred in rendering services to neighbouring counties.
Yatani also wants Parliament to convert user fees forgone from conditional to unconditional. The grant meant for the government to sustain its policy of not charging user fees in public health facilities.
But the committee raised issues with the conversions of the grants saying they pose some serious concerns.
“There is no evidence that the issues which made the grants conditionals have been addressed and whether the counties can undertake the functions with their equitable share as well as whether the counties will use same disbursement criteria as was being used,” said Kibiru, in his committee’s report on the scrutiny of the budget policy statement presented by Yatani.
In the draft Division of Revenue Bill, 2021, presented to Parliament, Yatani defended the conversion of the grants saying they will give the counties more autonomy to budget and prioritise allocation of resources.
In addition, the conversation will ensure a more consolidated funded of devolved functions and enhance tracking of performance and attribution of outcomes.
"If approved by Parliament, this will guarantee governments an equitable shareable revenue share allocation of Sh370 billion in 2021-222," reads the Bill.
Last month, the Intergovernmental Budget and Economic Council chaired by Deputy President William Ruto resolved that the counties be allocated Sh409 billion, including Sh370 billion equitable share.
The resolution anchored President's Uhuru Kenyatta's pledge to senators last year that ended protracted standoff over revenue formula in the House.
Mandera Senator Mohamed Mohamud said many counties are likely not to put the money to its intended use if the fund is converted.
“There was a reason we put in place the Road Maintenance Levy and tax fuel users, so that our roads are maintained.
"This money is going to be equitable share. It will get lost. In fact, counties will wish that was so. This is because the Sh9.7 billion will now be divided equally among counties. That will not share its roads,” Mohamud said.
-Edited by Sarah Kanyara