Governors petition Supreme Court over county funds row

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Governors have moved to the Supreme Court following a row with the national government over sharing of revenue that has threatened to stall services in the devolved units.

Council of Governors chairman Wycliffe Oparanya and his vice-chair Mwangi wa Iria led the county bosses in a protest march from the Intercontinental Hotel to the Supreme Court to file their petition.

Members of the mediation committee formed by the two Speakers of Parliament to develop a consensus over the dispute on the Division of Revenue Bill, 2019 have hit a dead end, putting the funds due to counties in danger.

The Senate and the National Assembly have disagreed on Bill, which allocates funds between the two levels of government.

The two sides have different figures for what is due to the counties.

While the National Assembly has revised its earlier position and proposed that counties get Sh316 billion, the Senate has demurred and insists that the law must be respected and counties allowed to get their due share.

The Senate has insisted on Sh327 billion.

In the initial Bill, the National Assembly had allocated Sh310 billion to counties as their share of the equitable shareable revenue, which was in line with National Treasury’s proposals. The Senate amended the Bill and placed the figure at Sh327 billion.

The National Treasury had proposed a reduction in county equitable share of Sh310 from Sh314 billion on account of underperformance of revenue that resulted to a downward adjustment of the forecasted revenue for the 2018/19 financial year.

The Council of Governors and the Commission on Revenue Allocation have opposed the reduction arguing that the move has no legal basis since it was not approved by Parliament and that it contravenes the Division of Revenue Act 2018 which provides that any shortfall in revenue should be borne by the national government.

CRA, the body mandated by the Constitution to determine the shareable revenue between the two levels of government, has proposed that the county equitable share should be pegged at Sh335 billion for the 2019/20 financial year.

The recommendation is based on adjusting the current base of Sh314 billion by an actual three-year average of annual inflation factor of 6.9 percent.

While the CRA proposal has taken into consideration inflation effect in line with key principles such as desirability of stable and predictable allocation of revenue, the basis of the proposed increase by the Treasury from Sh304 billion to Sh310 billion is not clear.

The Council argues that the proposed revenue is a negative reduction from the current Sh314 billion approved in the Division of Revenue Act, 2018.

In its memorandum on the Division of Revenue Bill, 2019, Mr Oparanya noted that the National Treasury economic projections show that the ordinary revenues will grow by 13 percent in the 2019/20 financial year giving no reason for the reduction in counties equitable share.

“The country’s economy has been projected to grow by 6.2 percent from the current 6.1 percent. There is a positive outlook in terms of economic growth and growth in ordinary revenues and there is absolutely no scientific reason for the equitable share of revenues to the counties to be reduced,” Mr Oparanya said.

The case is to be mentioned on July 19.

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