• According to observers the passage of the budgets are an exercise in futility after Senators and Members of the National Assembly failed to agree on the Bill.
• National Assembly Minority Leader John Mbadi said that budgets and continued withdrawal and expenditure of funds by the county executives are unconstitutional.
The focus has now shifted to the legality of the county government budgets following the failure by Parliament to pass the Division of Revenue Bill, 2019.
County Assemblies have been rushing to pass the 2019-20 financial budgets within the set timelines to save the devolved units from plunging into financial crisis.
Homa Bay, Kakamega, Kajiado and Taita Taveta are some of the assemblies that have passed budgets of their respective governments.
According to observers, however, the passage of the budgets is an exercise in futility after Senators and Members of the National Assembly failed to agree on the Bill.
The Bill is crucial legislation that spells out the sharing of revenues between the National and the County Governments for the 2019-2020 financial year that started on July 1.
The legislators maintained their hard stance with Senators insisting the counties should be allocated Sh327 billion and their National Assembly colleagues sticking to Sh316 billion leading to the collapse of the talks.
The Constitution stipulates that the Bill should be passed by both houses of Parliament before the unveiling of the budget statement for the new financial year by Treasury CS.
Senate’s Finance and Budget Committee chairman Mohamed Mohamud said all county budgets passed by county assemblies for the current financial year are null and void.
Mohamud cited Article 224 of the Constitution which provides that; "On the basis of the Division of Revenue Bill passed by Parliament under Article 218, each county government shall prepare and adopt its own annual budget and Appropriations Bill in the form, and according to the procedure, prescribed in an Act of Parliament."
Mohamud said that the consequence of not passing the Division of Revenue before the beginning of the new financial year is that county governments are precluded from preparing their own annual budgets and Appropriation Bills.
The Mandera Senator explained that the only remedy for the county governments is for their assemblies to pass votes on account – authorize the county executives to withdraw funds from the County Revenue Fund Accounts for recurrent expenditure.
However, Public Finance Management Act only provides for votes on account where Division of Revenue has been passed but for whatever reason, a county has not passed an Appropriation Bill – a piece of legislation that authorizes expenditure.
“The counties have therefore been placed in a precarious position as the options of votes on account can only be exercised with respect to the funds already in the respective County Revenue Funds,” Mohamud said.
National Assembly Minority Leader John Mbadi said that budgets and continued withdrawal and expenditure of funds by the county executives are unconstitutional.
“I see many counties are happy saying they have passed the budget in good time, but what budget? Article 224 does not allow you to prepare budget without Division of Revenue,” he said.
I see many counties are happy saying they have passed the budget in good time, but what budget? Article 224 does not allow you to prepare budget without Division of RevenueNational Assembly Minority Leader John Mbadi
“We are in a quagmire. We are in a state where I would say that whatever is happening with regards to finances in the counties, in my view, are all illegal,” Mbadi said.
“I know there is a provision that the treasury can allow them to spend some money, but you can only be allowed to spend some money on the basis of a budget. So if the budgets that are being prepared do not have any basis in law, then the expenditure is also illegal,” he added.
Institute of Economic Affairs director Kwame Owino said the stalemate in parliament over the revenue Bill has caused uncertainty in the budget process at the county level of government.
He called on all the Senate, National Assembly, National Treasury and the Council of Governors to sober up and come on a roundtable talk to end the crisis.
“There is a problem. A big one for that matter. It can only be solved when people sober up,” Owino said.
Nairobi County Assembly Majority Leader Abdi Guyo said all the county governments that have passed their budgets will have to start the process afresh.
“All these budgets that have been passed in the counties are illegal. On what basis are counties passing budgets without the Division of Revenue Bill?” he said.
Guyo said the Nairobi County Assembly only passed vote on account to keep the operations running as they wait for Parliament to pass the Bill.