Clash looms as governors reject MPs’ Sh405 billion counties budget

Governors and the Commission on Revenue Allocation have rejected the Sh405 billion proposed for the 2025/26 financial year.

The county chiefs, under the Council of Governors, are demanding at least Sh536 billion.

The governors hold that the current proposal fails to account for inflation, county functions and demand for devolved services.

Kakamega Governor Fernandes Barasa, who chairs the CoG’s Finance Committee, told Senators on Tuesday that the Sh405 billion figure was unacceptable.

“We urge the Senate to review the resource allocation framework to align with the macroeconomic and growth trends,” the county chief said.

He argued that the Division of Revenue Bill has not considered the recently delineated functions of national and county governments.

Barasa held that while the share of revenue to the national government has grown significantly (by an annual average of Sh700 billion), that of counties has stagnated.

The Senate had proposed a compromise figure of Sh465 billion, which was still significantly lower than what governors say is necessary.

The CRA, chaired by Mary Chebukati, had earlier recommended Sh417 billion, but even that middle-ground suggestion was ignored by the National Assembly and Treasury, which held firm at Sh405 billion.

The standoff threatens to derail budget approvals and could trigger a prolonged mediation process to agree on the Division of Revenue Bill, 2025.

It also has the potential of further straining the already tense relationship between national and county governments.

Chebukati yesterday told Senators that the explanation by national government that some of the funds were serving national interest doesn’t hold.

“The national interests can be implemented at any level of government based on the law of subsidiarity,” the CRA chair said.

If no agreement is reached, the dispute could escalate into another lengthy mediation process, delaying critical funding for counties and disrupting service delivery.

Governors are particularly incensed that the national government was still clinging to not only functions but even resources, citing deliberate efforts to weaken devolution.

There should be a transfer of state-owned parastatals that are performing devolved functions, together with the attendant resources, Barasa said.

He further pointed out unfunded discretionary functions to the tune of Sh73 billion, including housing levy deductions (Sh4 billion), NSSF (Sh6 billion), matching funds for aggregation parks (Sh11 billion), and matching funds for Community Health Promoters (Sh3.3 billion).

Governors also listed the cost of procurement of new medical equipment (Sh39 billion), annual wage increments (Sh6.3 billion) and doctors’ salary adjustments (Sh3.45 billion).

Another contentious issue is the allocation of Sh29 billion to national government entities for constitutionally devolved functions.

Makueni Governor Mutula Kilonzo Jr accused the national government of diverting funds meant for counties to politically motivated projects.

He cited budgetary allocations to the national government for free maternity (Sh2 billion), vaccines (Sh2 billion), family planning commodities (Sh500 million), reproductive health (Sh1.8 billion), ASAL department projects (Sh2 billion), Sh1 billion for irrigation, Agriculture subsidy (Sh14.5 billion), roads (Sh1 billion) and Water (Sh435 million).

"This is nothing short of a scandal," Kilonzo said. "If these funds were given directly to counties, we could achieve far more without wasteful duplication." 

Governors argue that this undermines counties’ autonomy, creates unnecessary bureaucracy and sidelines the devolved units in a process that was meant to empower them. 

For instance, state corporations handling agriculture, health, or infrastructure projects at the local level are effectively taking over roles that should be managed by county administrations.

This, they say, is a backdoor strategy to recentralise power. The debate has also exposed divisions within Parliament.

While the Senate has largely backed the governors’ push for increased funding, senators criticised the CoG for not doing enough to lobby the National Assembly.

Mandera Senator Ali Roba, who chairs the Senate Finance Committee, pointed out that governors have significant political influence but have failed to use it effectively to secure a better deal.

"The Senate has fought for devolution, but governors must also engage the National Assembly directly," Roba said. 

Nominated Senator Tabitha Mutinda called for a more candid discussion, urging Treasury officials to explain why the Equalisation Fund, meant to support marginalised regions, was underfunded by Sh10.4 billion.

She warned that failing to address these disparities would deepen inequalities and erode public trust in devolution.