Mbadi at pains to explain why counties will get Sh20b less

Counties may wait longer to get their shareable revenue, with the Senate insisting that they should get Sh 400 billion as the National Treasury sticks with Sh 380 billion

Treasury Cabinet Secretary John Mbadi had a difficult time explaining to the Senate Finance and Budget Committee why the government would give counties Sh20 billion less than the figure arrived at after a mediation process between members of the Senate and National Assembly.

Senate Majority Whip Boni Khalwale said the government should cut the huge expenditure allocated to unconstitutional offices such as the office of the First Lady, Spouse of the Deputy President and Prime Cabinet Secretary.  

“We should not massage the egos of some people in government, let us stop funding this unconstitutional offices. Also, why do we need all these advisors in government, the counties are already straining and it would be unfair to reduce their shareable revenue allocation,” said Khalwale.

Migori Senator Eddy Oketch asked Mbadi to state the scientific explanation as to why the Treasury was taking away Sh 20 billion from counties and further urged him to state the loopholes causing fiscal constraints.

Oketch said that there are several leakages in government where procurement officers were inflating figures leading to the government losing more than Sh300 billion annually and that should be addressed instead of reducing the county allocation amount arrived at following a mediation process.

“It is immoral to give counties less funds than they had been allocated since they are already struggling, the Cabinet Secretary should tell us why the government has not honoured the allocation for equalisation fund to marginalised counties,” said Oketch.

Kisii Senator Richard Onyonka said the decision to allocate counties more funds were arrived at following some consultations with the figure being less than what the Senate and the Council of Governors had arrived at and that it would be unfair to give a lesser amount than what they got before.

The Division of Revenue (Amendment) Bill, 2024 (National Assembly Bills No. 38 of 2024) proposes to allocate County governments equitable share of Sh 380 billion from the shareable revenue raised nationally, reflecting a reduction of Sh 20 billion from an allocation of Sh 400 billion initially allocated in the Division of Revenue Act (DORA), 2024.

Mbadi told the committee chaired by Mandera Senator Ali Roba that this was occasioned by the fact that the projected revenue raised nationally for the financial year 2024/25 dropped significantly by Sh 346 billion from Sh 2.9 trillion to Ksh. 2.6 trillion due to the revised revenue raising measures.

“However, the National Treasury has made further fiscal adjustments that have reduced the shortfall from Sh 346 billion to Sh316.72 billion, the revised ordinary revenue for financial year 2024/25 is, therefore, projected at Sh 2.6 trillion, note that this happened during the finalisation of the Supplementary Budget Estimates No. 1 for Financial Year 2024/25 which was after the submission of the Division of Revenue (Amendment) Bill, 2024,” said Mbadi.

He said that in the revised fiscal framework for Financial year 2024/25, Equalisation Fund has an allocation of Sh 8 billion, out of which Sh7.85 billion is the allocation for Financial Year 2024/25 and Sh147.19 million will go towards payment of arrears as indicated in the proposed new Schedule.

Mbadi said that in order to bridge the financing gap of Sh316.72 billion as well as enable the National Government to provide resources towards critical expenditure areas, it is proposed that Sh2.2 trillion is allocated to the National Government, while Sh 380 billion is allocated to County governments.

He said that due to withdrawal of Finance Bill 2024, there are critical and national interests that are underfunded including employment of Junior Secondary School teachers, posting of medical interns to support health service delivery and implementation of universal health coverage and meeting continental obligation to construct five stadia for hosting African Cup of Nations.