MPs reject Governors’ push for extra Sh132 billion in county funds

Members of Parliament have rejected a push by governors to increase county allocations by an additional Sh132 billion, setting the stage for a fresh dispute between the two levels of government.

The Budget and Appropriations Committee of the National Assembly has instead allocated counties Sh405.06 billion for the financial year beginning July, arguing that a higher amount would strain the national government’s ability to service debt.

The decision is likely to spark renewed tensions, as governors have been lobbying for Sh536.8 billion to cater to various financial obligations, including enhanced contributions to the National Social Security Fund (NSSF) and the housing levy.

The Council of Governors has decried the failure of the national government to increase allocations, saying counties are struggling with unpaid bills, pending statutory deductions, and new levies imposed on formal workers.

“The equitable share to counties be increased from Sh405,069,420,197 to Sh536,880,000,000 to cater for unmet discretionary expenses such as enhanced contributions to NSSF, housing levy deductions,” the Council of Governors said in their submission to the committee.

However, the committee maintained that the current economic situation does not allow for such an increment, citing rising public debt obligations that the national government must prioritize.

“The committee noted that while the proposal is plausible, the national government’s share includes interest payment on public debt, that has been on an upward trajectory and that sharing of resources should be cognisant of the prevailing macroeconomic conditions,” the report states.

The National Treasury had also proposed the same allocation of Sh405.06 billion for counties while setting aside Sh2.41 trillion for the national government and Sh10.58 billion for the equalization fund to counties.

Governors have argued that without an increase in allocations, counties will continue facing financial difficulties, particularly in settling pending bills owed to contractors, as well as meeting statutory obligations such as Pay-As-You-Earn (PAYE) and NSSF contributions.

The financial strain has been worsened by poor performance in raising own-source revenue, making it harder for devolved units to meet growing expenditure demands.