Treasury caps county cash at Sh316.5 billion

The Treasury has ignored the recommendations of the Commission on Revenue Allocation (CRA) to cap equitable share for counties at Sh316.5 billion “to compel the devolved units to seal revenue leakages”.

In the Budget and Policy Statement Policy for the 2020/21, the Treasury says the equitable share remains unchanged for the year starting July 1 “because it’s time the counties bore the brunt of missed revenues targets.”

At Sh316.5 billion, the equitable share for the next financial year is Sh5.2 billion short of what the CRA has proposed for the period.

“It is proposed that county governments’ equitable share for FY 2020/21 be retained at Sh316.5 billion.

The implication of this is that there will be no additional funding from the equitable revenue share for county governments’ wage and salary costs as well as development and other operations and maintenance costs,” Treasury Secretary Ukur Yatani said in the BPS.

The freeze on additional funding to counties marks the continued move by the Treasury to cut spending of public funds that is already in force across ministries, departments, and agencies (MDAs).

Last week, the chairman of the Budget and Appropriations (BAC) committee Kimani Ichung’wa supported the Treasury’s proposal in what is likely to open fresh wars with the Senate that has previously called for increased funding to the counties.

The two houses clashed over the equitable share of revenues to counties for the 2019/20 period, leading to delays in the release of funds that nearly crippled operations at the devolved units that rely on the Treasury due to misses in own-source collections.

Senators had sided with the CRA in pushing for Sh314.7 billion for the counties while MPs stuck with Sh291 billion, delaying the passing of the County Revenue Allocation Act of 2019 to September.

The stand-off saw the 47 governors move to the Supreme Court to challenge the division of shareable revenue as they sought a breakthrough.

The two houses agreed on Sh316.5 billion last September easing a cash crunch that had put in jeopardy delivery of key services like healthcare in the counties.