Senators reject Ruto's proposal to cut counties allocation by Sh20 billion

The Senate has rejected President William Ruto’s proposals to reduce the shareable revenue to counties by Sh20 billion.

The matter will now go for mediation with the National Assembly after the senators rejected the move to slash the shareable revenue  from Sh400.1 billion to Sh380 billion.

On Thursday, 28 Senators voted to retain the Sh400 billion that was in the original Division of Revenue Bill despite their colleagues from the National Assembly supporting the reduction.

The vote was taken after the chairperson of the Senate Committee on Finance and Budget Ali Roba moved amendments retaining the shareable revenue at Sh400.1 billion but proposed a reduction of total sharable revenue at the national government from Sh2.6 trillion to Sh2.2 trillion.

“The Senate Finance and Budget committee has deleted a proposal that whenever there is a shortfall in collection of revenue, both counties and the national government will share the shortfall as this is no longer tenable,” said Roba.

He said downward revision of projected ordinary revenue means that they have deleted the proposal that would have seen both counties and national government bear  the brunt whenever there is a shortfall because this proposal is not tenable.

The Mandera senator said Senate has only proposed a reduction of the national government sharable revenue from Sh2.6 trillion to Sh2.2 trillion while maintaining the shareable revenue at 400.1 billion as passed by the initial Bill.

Vihiga Senator Godfrey Osotsi had sought explanation from Roba on what downward revisions of projected revenue meant arguing that it was important for ordinary citizens to understand.

In the presidential memorandum communicated to the House in July, Ruto asked the Senate to amend the Bill and reduce the shareable revenue due to counties in the Financial Year 2024/2025 from Sh400.1billion to Sh380 billion.

The new figure proposed by the President, in what he termed as austerity measures to manage the crisis in the country, was Sh5 billion less than what the county governments received in the last financial year, 2023/24, which was Sh385 billion.

“In exercise of the powers conferred on me by Article 115(1) (b) of the Constitution, I decline to assent to the County Allocation of Revenue Bill, 2024 and refer the Bill for reconsideration by the Senate.  I recommend the Bill be amended by deleting the First Schedule and replacing it with a Schedule that is attached to the Memorandum,” reads the presidential memorandum.

The Council of Governors last month rejected the proposal to deduct the counties equitable share with the Commission for Revenue Allocation supporting the counties to get the full amount saying its reduction will affect service delivery.

CoG argued that what had already been allocated was inadequate given that the Senate had initially allocated Sh 415.9 billion that was reduced through a mediation process between both houses of Parliament with both figures below the counties’ proposed Sh439.5 billion.

CoG Vice Chairman Ahmed Abdullahi led a team of 20 governors before the Senate Finance and Budget Committee in stating that they are cognizant of the unique challenges the country is currently faced with following the recent demonstrations that led to the rejection of the Finance Bill, 2024 among other challenges.

Treasury Cabinet Secretary John Mbadi had a difficult time  last month explaining to the Senate Finance and Budget Committee why the government was keen on having counties get Sh20 billion less than the figure arrived at following the mediation process between members of the Senate and National Assembly.

Mbadi told the Senate committee that this was occasioned by the fact that the projected revenue raised nationally for the financial year 2024/25 dropped significantly by Sh346 billion due to the revised revenue raising measures.

“The National Treasury has made further fiscal adjustments that have reduced the shortfall from Sh346 billion to Sh316.72 billion,” said Mbadi.