Counties overshoot budgets in spite of public spotlight

County governments brushed aside rising concern over their spending habits to burst their budgets by large margins in the second quarter of the year, a new report shows.

A number of the devolved governments found it hard to live within their means and spent more than four times the budgeted amounts in sitting allowances, foreign travel and motor vehicle purchases, the Controller of Budget Agnes Odhiambo says in the half-year report that was released on Monday.

The extra money spent on these budget lines was taken from areas the accounting officers felt were less important even without following the laid-down procedures of movement of votes.  

“The management of this [sitting] allowance needs to be strengthened. … [Counties] spent resources meant for other activities to meet this expenditure which is not prudent,” Mrs Odhiambo says.

And in a finding that should show President Uhuru Kenyatta where to focus in his effort to reduce the public wage bill, Mrs Odhiambo says thousands of county government employees spend money on official assignments but could not account for it.

Mrs Odhiambo has particularly directed her spotlight on county finance officers, most of whom she found had thrown caution to the wind and were using discretion to manage official spending.

The Controller of Budget publishes the report every three months as part of the constitutional requirement that she informs Parliament on the state of budget execution.

READ: Audit firm warns of county spending leakages

Mrs Odhiambo’s finding that most county governments are overstaffed and her recommendation that some counties cut the number of employees to manage the wage bill are expected to add impetus to the ongoing Jubilee government’s campaign for large-scale retrenchment of public servants to reduce the salaries burden. 

Nairobi, Kilifi and Kakamega, Tana River and Trans Nzoia topped the list of rogue spenders, who misdirected money meant for other purposes to paying sitting allowances or purchase of vehicles.

Nairobi topped the list of rogue spenders having pumped Sh258 million in sitting allowances or 61 per cent more than was budgeted.

To stem rising spending on staff Mrs Odhiambo says county governments should limit any new hiring to essential staff.

“Measures [to cut county spending] should include freezing of new recruitment except for essential services and downsizing of the workforce,” she says, adding that if this cost is left unchecked, the counties may not be able to fully implement their development activities as [they] are operating on limited resources.

The recommendation is hinged on the finding that in the first six months of the financial year, the national government paid Sh3.7 billion in salaries for staff performing devolved functions that the counties were unable to pay, showing that the devolved units have more workers than they can afford.

The national government has consequently invoiced the counties for a reimbursement – signalling tough times ahead as the devolved units pay back the debt.

Public finance experts reckon that President Kenyatta’s quest to cut the wage bill will not bear fruit unless requisite controls are introduced at both national and county government levels.

READ: Uhuru faces legal hurdles in quest to retire civil servants

“Many counties do not yet have the capacity to handle the funds allocated. Some of the officials may believe what they are doing is right, even though it is illegal,” said Alvin Mosioma, the executive director of Tax Justice Network Africa, an international NGO that interrogates public expenditure.

“There is need to address the capacity of counties first and remember that people are also questioning the way the money is being raised.”

Mrs Odhiambo found that the counties spent disproportionate amounts of money on domestic and foreign travel, an anomaly she attributes to the discretion with which county finance officers are exercising their mandate.

Elgeyo Marakwet, Trans Nzoia, Turkana and Nyeri topped the list of high spenders on travel — having consumed 113.9, 96.7, 91.1 and 86.1 per cent of their annual budgetary allocation six months into the financial year respectively.

“It is expected that counties should have an average of 50 per cent absorption rate of the travelling expenditure against the budget. Counties should come up with policies to manage the travel expenditure so as to avoid wastages,” Mrs Odhiambo says.

Tana River topped the list of high spenders on motor vehicle purchase, having spent Sh79 million against a budget of Sh55 million. It was followed by Trans Nzoia which spent Sh62.7 million on vehicles against a budget of Sh60 million.

Mrs Odhiambo says such runaway spending is a sign of weak internal controls.

The report, however, shows that the devolved units have a big challenge in the management of imprests or cash advances that county employees receive and are required to account for through surrender of relevant documents.

“A number of counties did not manage imprests as required by the law and other financial regulations. Officers took huge imprests, which were not accounted for as per the regulations,” Mrs Odhiambo says.

The report singles out lack of capacity as a big problem for county governments.

“There is inadequate technical capacity to support the county assemblies on the technical areas of budget preparation and legislation. This challenge should be addressed forthwith …” Mrs Odhiambo says.

Even more important is the finding that the Integrated Financial Information Management System (IFMIS) does not appear to have been put to use by most county governments, leaving the gaps through which money is being wasted or lost.

“Operationalisation of the IFMIS system has been hampered by connectivity challenges in most counties and the inadequate capacity of the users coupled with resistance to the system,” says Mrs Odhiambo.

The majority of the counties were found to have used manual system of processing transactions hence affecting accurate reporting on budget execution.

This is despite the Treasury’s publication of numerous advertisements showing that IFMIS is fully in place and in use.