Budget battle: Senators push for more County funds as MPs resist

A standoff is looming between the Senate and the National Assembly over the allocation of funds to counties in the 2025/2026 financial year, with the two Houses pushing for different figures.

The Senate Finance and Budget Committee is advocating for counties to receive Sh465 billion, while the National Assembly’s Budget and Appropriations Committee (BAC) has backed a lower figure of Sh405.1 billion, aligning with the National Treasury’s proposal.

The National Treasury has defended its recommendation, citing a difficult economic environment marked by lower-than-expected revenue collection and increasing national debt obligations.

In a report presented to the National Assembly, the BAC, chaired by Alego Usonga MP Samuel Atandi, justified the Sh405 billion figure as the most realistic given the budgetary constraints and overall economic outlook.

The Treasury, which appeared before the committee, emphasized that the proposal was informed by anticipated revenue shortfalls in the 2025/2026 financial year, as well as the rising burden of public debt.

According to Treasury officials, the government is dealing with revenue underperformance, which has limited its ability to expand spending.

Public debt repayment is projected to take up 52 percent of ordinary revenue in the 2025/2026 financial year, a sharp rise from an average of 41 percent recorded between the 2016/2017 and 2024/2025 financial years.

Additionally, the BAC rejected proposals by the Council of Governors (COG) and the Commission on Revenue Allocation (CRA).

The governors had sought Sh536.88 billion for counties, while CRA had recommended an allocation of Sh417.4 billion.

Governors argued that the baseline allocation should be Sh400.1 billion, not the Sh387.4 billion figure used following budget cuts linked to the Gen Z protests in June 2024.

However, BAC dismissed the governors’ proposals, noting that they were based on the fourth basis for revenue sharing, a formula that is yet to receive parliamentary approval.

The committee also stressed that revenue allocation was based on audited revenue for the 2020/2021 financial year, which may not reflect the current economic situation.

“The committee noted that the equitable share proposed by the National Treasury takes into account present macroeconomic conditions amidst budgetary constraints. Notably, the allocation is above the 15 percent threshold prescribed by the Constitution,” the BAC report stated.

It further observed: “The committee, therefore, noted the need to delink the process of vertical sharing of revenue between the two levels of government, as mandated by Articles 202, 203, and 218(1)(a), from the horizontal sharing of revenue among the 47 counties.”

On the other hand, the Senate’s Finance and Budget Committee has maintained that counties should receive Sh465 billion, arguing that the proposal considers economic factors, expected revenue, and inflation.

Mandera Senator Ali Roba, who chairs the Senate committee, stated that the figure accounts for increasing financial burdens on counties, including the housing levy and Social Health Insurance Fund.

“The BPS proposal of Sh405.1 billion for counties does not account for rising non-discretionary commitments such as the housing levy and Social Health Insurance,” Roba said.

The Senate has also maintained that counties should receive allocations based on the proposed fourth basis, a position that is at odds with BAC.

With both Houses holding their ground, it remains uncertain whether a compromise will be reached soon.