City Hall defies order not to spend cash before banking
Controller of Budget Agnes Odhiambo. Members of the county assembly will be forced to slash their budget by Sh150 million to enable the devolved unit to comply with the new rules guiding spending. FILE PHOTO |
What you need to know:
In the first quarter of the current fiscal year, City Hall only deposited Sh132 million into the authorised County Revenue Fund against internal revenues of Sh1.7 billion.
The Constitution requires that all revenues generated be paid into the Fund before they are released for spending.
It now remains to be seen if the Budget committee will take any action for the continued breach having threatened to do so in a report dealing with the issue last year.
The trend by City Hall to spend cash raised from levies and rates before depositing the money in Nairobi’s main bank account has continued despite warnings from the Controller of Budget.
In the first quarter of the current fiscal year, City Hall only deposited Sh132 million into the authorised County Revenue Fund against internal revenues of Sh1.7 billion.
The Constitution requires that all revenues generated be paid into the Fund before they are released for spending. This is in a bid to create accountability and ensure governments follow budgets.
“Money shall not be withdrawn from a Revenue Fund unless the Controller of Budget has approved the withdrawal,” adds the supreme law.
The issue of spending at source has severally been raised by the Controller of Budget Agnes Odhiambo, prompting her in last year’s third quarter report to ask that action be taken against Nairobi for repeatedly ignoring the law.
The Public Finance Management Act allows the Treasury to temporarily withhold up to half of the share of a county’s cash from the national government for devolved units that breach the law.
The county Assembly Budget committee then promised to keep the county Treasury on a tight leash which led the Controller of Budget in her full year report to note that appropriate action was being taken.
“In the fourth quarter of FY2013/14, mechanisms were put in place to ensure that local revenue is deposited into the CRF,” Ms Odhiambo said.
But the latest figures indicate that the county is still struggling to comply with the law. A county officer told the Business Daily that the delay in disbursement of funds from the national Treasury made it difficult to comply.
“You find that by the time the money reaches the bank, already commitments for overdrafts and such like things eat into collections so the amount which remains which can be swapped to the CRF is very small.”
Last year, the county spent Sh17.8 billion against 9.3 billion released by the CoB.
It now remains to be seen if the Budget committee will take any action for the continued breach having threatened to do so in a report dealing with the issue last year.
“Going forward, the committee insists that no officer shall be indispensable in this mission of ensuring that we remain a law-abiding county,” the committee had said.
The county also received Sh1.4 billion from the national government although this is usually directly deposited into the CRF.
City Hall has a budget of 28.7 billion. Internal revenue collection has however been low with the city only collecting 10 per cent of its target in the first quarter.
This means it will continue to rely heavily on the national government transfers to settle its pressing obligations, especially wages.
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