Counties are staring at a reduced revenue allocation for the next financial year after senators, in a major climbdown, agreed to slash their initial proposal by Sh30 billion during mediation talks with the National Assembly.

The Senate team dropped its proposed allocation from Sh465 billion to Sh435 billion as the mediation committee held its first meeting to resolve the stalemate over the Division of Revenue Bill, 2025.

In contrast, the National Assembly only raised its proposal slightly, from Sh405 billion to Sh408 billion.

The talks, co-chaired by Senate Budget and Finance Committee chairperson Ali Roba and National Assembly Budget Committee chairperson Samuel Atandi, involve 18 members—nine from each House.

The committee convened on Friday in an effort to fast-track passage of the bill and enable timely disbursement of funds to counties ahead of the July 1 start of the new financial year.

National Assembly members defended their lower proposal, pointing to a tough revenue collection environment.

 “Let’s make promises we know we can keep. We must consider how much we can realistically collect and deliver,” Atandi said.

Kilifi North MP Owen Baya warned against bloating allocations, saying they would lead to more unpaid bills.

“We’ll end up with huge pending bills. The Sh18 billion increase from the previous fiscal year is already substantial,” he said.

Ndia MP George Kariuki urged a realistic approach.

 “We must ask ourselves what we can afford. Let’s be realistic and operate within our means, even as we push the government to find new ways of raising revenue,” he said.

But senators dismissed these arguments, accusing the national government of over-centralising resources while pushing counties to foot the bill for new national policies.

 Senator Roba said counties are already struggling with non-discretionary costs driven by national mandates, including the housing levy, enhanced social security contributions, and stipends for community health promoters.

“These costs must be factored into the revenue share. Both levels of government stand to suffer if we don’t make progress,” he said.

Elgeyo Marakwet Senator William Kisang backed the initial Sh465 billion proposal, noting that counties are carrying over Sh35 billion in national expenditures and need strong support for development.

Following intense deliberations, both sides temporarily agreed on the Sh435 billion figure, with further discussions set for next Monday.

 “We will hold internal consultations. There’s goodwill, especially from the Senate. But we need to conclude soon due to other looming constitutional deadlines,” said Roba.