CRA and Council of Governors clash as figures presented

The battle over the allocation of funds to county governments in the next financial year is already heating up, with various state entities presenting widely differing figures.

The development comes even as the members of the National Assembly approved the National Treasury’s proposal.

In a heated session before the Senate Finance and Budget Committee, governors, through the Council of Governors and the Commission on Revenue Allocation sparred over the equitable share of nationally raised revenue for counties.

While the CoG pushed for Sh534.95 billion, the CRA proposed Sh458.9 billion, both figures far above the Treasury’s Sh420 billion allocation to devolved units, compared to Sh2.47 trillion for the national government.

“The commission recommends that county governments' equitable share allocation be increased to Sh458.9 billion in the FY (financial year) 2026-27 to ensure equity in the sharing of nationally raised revenue,” CRA acting chief executive officer Roble Nuno said.

The CRA’s recommendation represents an increment of Sh43.94 billion from the current financial year’s allocation.

The increase includes Sh35 billion, an adjustment for revenue growth, and Sh8.94 billion to transition universal health coverage workers from the Ministry of Health to counties.

According to the CRA, the Treasury’s proposal of Sh420 billion represents only a Sh5 billion increase from the current year.

This allocation is insufficient to cover an estimated Sh5.85 billion required for annual salary increments, based on a three per cent adjustment of the counties’ aggregate wage bill of Sh195 billion.

Senators, in their recommendations on the Budget Policy Statement, suggested Sh454.74 billion.

The Senate is now seeking stakeholders’ views on the Division of Revenue Bill, 2026, which sets out how national revenue will be shared between the national and county governments.

This sets the stage for another potentially long and bitter mediation between Senators and members of the National Assembly, reminiscent of previous years’ disputes.

The CoG argues that the Treasury and National Assembly have consistently made “arbitrary” allocations to counties.

CoG chairman Ahmed Abdullahi faulted the government over the issue, saying;

“We note that the National Treasury and National Assembly have been making arbitrary allocations regarding counties’ equitable share as opposed to the national government’s share of revenue.”

The council’s proposed Sh534.95 billion allocation includes Sh35 billion for revenue growth, Sh8.93 billion to transition UHC workers, Sh10.05 billion to implement outstanding remuneration and benefits review cycles and Sh65.96 billion for transfers under the first phase of delineated and gazetted devolved functions.

Governors say Kenya’s economy is projected to grow by 5.3 per cent in 2026 and 2027, with a revenue increase of Sh262.2 billion.

They argue that a Sh35 billion allocation for counties, as recommended by the CRA, is fair given the national government will receive a Sh217.6 billion increment.

On the UHC workers’ transition, the CoG insists the Ksh8.94 billion meant for counties should be transferred through the Division of Revenue Bill rather than as a conditional grant.

Contracts for these workers are set to lapse between April and September this year, and under the agreement between the Ministry of Health and CoG, they will be absorbed on permanent and pensionable terms.

The CoG also highlighted arrears in counties’ implementation of the third and fourth remuneration and benefits review cycles.

According to the Salaries and Remuneration Commission, Sh4.77 billion is required to complete the third cycle and Sh5.28 billion for the initial phase of the fourth cycle.

“The national government has already implemented all cycles, leaving counties behind,” the council said, warning that the delay has already sparked industrial action among county public officers.

Lastly, the council said that Sh65.97 billion has been identified for transfer to counties under the first phase of unbundled and delineated national functions.