Counties can now begin planning their budgets for the 2025/26 financial year after President William Ruto signed the Division of Revenue Bill into law, setting the stage for the sharing of Sh2.835 trillion in nationally raised revenue between the two levels of government.

Under the new law, counties will receive Sh415 billion as their equitable share, a rise of Sh27.6 billion from the previous financial year. The Equalisation Fund has also been allocated Sh9.6 billion, providing targeted development support to 34 counties identified as marginalised.

The Bill, which was tabled by Uasin Gishu MP and Liaison Committee Chairperson Gladys Boss, went through all legislative stages, including approval by both Houses, amendments in the Senate, rejection in the National Assembly, and final mediation.

Initially introduced in the National Assembly on March 14, 2025, the Bill was passed on April 9 without changes. When it reached the Senate, amendments were made on May 28, which included updating the revenue base to the 2021/22 financial year and raising the proposed county share to Sh465 billion. These changes were rejected by the National Assembly, prompting the formation of a Mediation Committee.

On June 18, the Mediation Committee reached a compromise, agreeing to set county allocations at Sh415 billion, based on a revenue base of Sh1.920 trillion from the 2021/22 financial year. This figure represents 21.61 percent, well above the constitutional minimum requirement of 15 percent.

The final mediated version was passed by the National Assembly on June 19 and by the Senate on June 30.

With the law now in effect, the National Government has been allocated Sh2.332 trillion, County Governments will get Sh415 billion, and Sh9.6 billion has been set aside for the Equalisation Fund. The overall revenue forecast for the year was adjusted to Sh2.756 trillion, taking into account prevailing economic conditions and previous revenue trends.

The Sh415 billion share for counties follows the Fourth-generation revenue sharing formula, which also includes an affirmative allocation of Sh4.46 billion equally divided among 12 counties to provide added support.

To ensure service delivery at the county level is not disrupted by possible national revenue shortfalls, Clause 5 of the new law includes a provision requiring the National Government to cover any deficit, offering counties financial security as they implement their budgets.

The Equalisation Fund, which is now fully integrated into the law, will finance infrastructure projects in the selected 34 counties. It will focus on improving access to key services such as roads, water, health facilities, and electricity, as outlined in Article 204 of the Constitution.

With the presidential assent, the Bill now provides a legal framework for financial operations across both levels of government for the new financial year. County Governments are expected to move forward with budget planning and implementation, guided by the confirmed revenue allocations.