Senators push for Sh415 billion allocation to counties in 2024-25

Senators have recommended that counties be allocated Sh415.95 billion in line with the projected revenue growth. 

The recommendations were made by the Senate Finance and Budget committee .

“The proposed shareable revenue to the county governments for the financial year 2025-25 should be Sh415.95 billion,” the committee said in a report.

The report on the 2024 Budget Policy Statement was tabled on the floor of the House on Wednesday.

The proposal has complicated the matter as it differs from the amount the National Treasury, Commission on Revenue Allocation and Council of Governors proposed.

Treasury wants the devolved units to get Sh391 billion up from the current Sh385 billion.

CRA, on the other hand, has fronted an allocation of Sh398 billion while the governors are pushing for Sh450 billion.

In the report, the committee said the recommendations are based on adjustments for revenue growth of 6.4 per cent.

The committee has also repurposed some Sh5.86 billion that was initially directed towards Medical Equipment Service programme, which has since been scrapped.

“The growth of the county equitable share is disproportionately lower than the projected growth in ordinary revenue collection, denoting inequity in resource distribution,” the report states.

The committee poked holes in the criteria used by the Treasury to propose an allocation of Sh391 billion to the devolved units.

“The proposed County Equitable Share amounting to Sh391.1 billion has increased by 1.5 per cent from financial year 2023-24 allocation of Sh385.425 billion, compared to a 13.9 per cent projected increase in ordinary revenue collection,” the committee said.

According to the committee, the county governments are experiencing additional expenditure pressures emanating from statutory deductions.

The deductions include the proposed housing levy and increased NSSF and NHIF contributions.

“Additionally, the requirement that county governments provide counterpart funding towards community health promoters further constrains the baseline expenditure levels,” the committee said.

The statutory deductions, the committee argued, reduce resources for other county government priority expenditures thus the need for more funding.

Last month, COG led by its chairperson Anne Waiguru persuaded the committee to reject Treasury’s proposed allocation of Sh391 billion and instead give the devolved units Sh450 billion.

“The CoG deems this disproportionate and inequitable. We are proposing an allocation of Sh450 billion,” she said.

The allocation should comprise of Sh439.5 billion as equitable share and Sh10.5 billion from the Roads Maintenance Levy Fund.

Their proposal for higher allocation is based on the projected revenue, inflation and growth of county staff.

The governors argued that the projected ordinary revenue is set to grow by 15 per cent, which is an absolute revenue increment of Sh376.9billion.

Waiguru told the committee that of Sh376.9 billion only Sh5.7 billion, which represents 5.6 per cent is added to the current Sh385 billion to the counties.

CRA, on the other hand, argued that its proposal of Sh398 billion is based on various factors including projected revenue growth as well as inflation.

“The allocation of Sh396.05 billion is equivalent to 23.7 per cent of the most recent audited and approved accounts,”chairperson Mary Chebukati said.