The National Treasury is set to slash the amount of cash proposed by Commission on Revenue Allocation (CRA) for counties for the financial year starting July 1 by Sh4 billion.
In what looks set to reignite the rivalry between the Senate and National Assembly, the Treasury is seeking to cut the equitable share for counties to Sh317.8 billion, down from Sh321.7 billion recommended by the CRA.
Last year, a clash between the CRA and the Treasury over equitable share fuelled turf wars between the Senate and Treasury forcing President Uhuru Kenyatta to delay the signing of the revenue sharing law.
The CRA, chaired by Ms Jane Kiringai had in its recommendation said that counties should be allocated Sh5.2 billion more for development projects while recurrent budget is retained as 2019/ 20 level.
The Treasury, on the other hand maintains that increased obligations such as debt payment, pensions, gratuities and salaries for constitutional and independent commissions have weakened its ability to raise equitable share for counties.
“To deal with the divergent recommendations by the National Treasury and the CRA, further engagements are scheduled to take place with all key actors under the auspices of the Intergovernmental Budget and Economic Council (IBEC),” Treasury Cabinet Secretary Ukur Yatani said in the draft Budget Policy Statement (BPS) for the 2020/21 period published last week.
“These engagements will among other things, seek to avert a stalemate in the FY 2020/21 division of revenue process, the kind that took place in FY 2019/20,” Mr Yatani added.
The counties received Sh316.5 billion in equitable share in the current year ending June, but governors have been calling for an increase in the allocation to cater for inflation, population growth and rise in expenses.
Ahead of the 2019/20 budget truce, senators had sided with 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.
Under the County Allocation of Revenue Act of 2019, the devolved units were subsequently allocated Sh378.48 billion comprising Sh316.5 billion in equitable share, Sh2.89 billion national government grant and Sh39.08 billion in donors’ grant.