President William Ruto and National Treasury CS John Mbadi may further reduce the national government budget to allocate more funds to counties. This decision comes after senators pledged to reject any cuts to funding for devolved units as suggested by the President and the Treasury.
Ruto and Mbadi have proposed a reduction in county revenue by Sh20 billion, lowering it from Sh400.1 billion to Sh380 billion for the current financial year. This follows the withdrawal of the controversial Finance Bill, 2024, which resulted in the government forgoing approximately Sh350 billion in revenue.
During a meeting with Mbadi regarding the new Division of Revenue Bill, 2024, members of the Senate Finance and Budget Committee, chaired by Mandera Senator Ali Roba, expressed strong opposition to the Treasury’s proposal.
“Our stance is clear: do not cut funds to counties. Reduce the national government budget, but leave county funds intact,” stated Kisii Senator Richard Onyonka. Roba emphasized that counties received Sh385 billion in the previous fiscal year and would not accept a drop to Sh380 billion.
He noted that counties face non-discretionary expenditures imposed by the national government, totaling Sh39.98 billion. This includes Sh4 billion for housing levies, Sh3 billion for enhanced National Social Security Fund (NSSF) contributions, and Sh5.3 billion for county aggregation and industrial parks.
Additionally, counties will have to cover payments for community health promoters totaling Sh3.23 billion, Sh5.64 billion for medical equipment services, and Sh2.85 billion for the Integrated Payroll and Personnel Database. There is also Sh5.8 billion allocated for doctors’ Collective Bargaining Agreement (CBA) obligations through 2024.
Roba criticized the national government’s borrowing practices, saying, “The national government has borrowed over the years for trivial reasons, yet it cannot secure funds to ensure counties can manage their projects. How do you expect counties to handle all these responsibilities?”
Mbadi argued for the reduced allocation, citing a projected ordinary revenue drop from Sh2.9 trillion to Sh2.6 trillion following the withdrawal of the Finance Bill. He stated that the government would not borrow to maintain the previously approved Sh400.1 billion for counties.
The CS explained that the country is operating under tight fiscal constraints, facing a shortfall of at least Sh316.7 billion in ordinary revenue collection in the previous financial year, necessitating budget cuts across all levels of government. He noted that the national government has absorbed 93.6% of the austerity measures, while counties will only bear 6.4%.
Out of a Sh2.63 trillion budget, debt servicing consumes Sh1.1 trillion. Non-discretionary expenditures, excluding salaries, amount to Sh190.4 billion, with Sh750 billion allocated for salaries and wages each month, leaving only Sh531 billion for other programs. With counties set to receive Sh380 billion, this leaves just Sh151 billion for other initiatives like the national government constituency development fund and affirmative action fund.
“This means we have been borrowing to cover recurrent expenditures, which is both unconstitutional and immoral. We need to stop this and live within our means,” Mbadi stated.
However, senators were unimpressed by these arguments. Nominated Senator Tabitha Mutinda asserted that the committee could not recommend a reduction in funding below what counties received last year. She accused the Treasury of prioritizing national government funding at the expense of counties: “Are you only concerned about expenditures at the national level?” she questioned.
