What you need to know:
- The Controller of Budget’s report raises serious questions about the counties’ ability to raise their own revenue.
- Sources told the Sunday Nation that the governors were left aghast at the analysis and pleaded with the national government not to publicise the report.
Revenue collection by 14 counties fell below amounts generated by the former local authorities under their respective jurisdictions during the last financial year, an analysis by the Controller of Budget shows.
In addition, the analysis shows that all but four counties failed to meet their local revenue collection targets, a situation that could dampen governors’ clamour for more money through the Pesa Mashinani drive.
The Controller of Budget’s report, which was shared with a section of governors who met Deputy President William Ruto last Wednesday, raises serious questions about the counties’ ability to raise their own revenue.
The report compares what the counties collected in the 2013/2014 financial year and the amounts generated by the former local authorities in their final year of existence (2011/12).
Under the 2010 Constitution, local authorities were merged into counties that now have expanded jurisdictions, and one would rightly expect more revenue from property and entertainment taxes and user charges.
In fact, some counties have introduced new laws and revenue streams and increased taxes.
Counties have also enhanced collection of the toll fee from public service vehicles and parking charges.
Furthermore, and it emerged during the meeting they had with the Deputy President, some counties may not be accounting for all the billions they generate locally, hence the difference between what the former local authorities used to generate.
WERE LEFT AGHAST
The report was made known to the governors during the meeting when one of the governors present apparently rose to express the collective discontent with what the county boss said were too many oversight institutions monitoring county governments.
It was at that point the report was presented to the governors to demonstrate to them why they needed such vigilance from various institutions.
Sources at the meeting told the Sunday Nation that the governors were left aghast at the analysis and pleaded with the national government not to publicise the report.
According to the report, local revenue collections by Bungoma, Elgeyo Marakwet, Embu, Garissa, Homa Bay, Isiolo, Kirinyaga, Kisii, Kisumu, Marsabit, Nyandarua, Siaya, Taita Taveta and Tana River counties in 2013/14 were lower than former local authorities in their jurisdiction in 2011/12 by a combined Sh1 billion.
Governor Kenneth Lusaka’s Bungoma County collected Sh182.7 million during the period under review compared to Sh314.93 million that the former local authorities now under the county’s jurisdiction collected in 2011/12.
This led to a shortfall of Sh132.23 million.
Elgeyo Markwet County, on the other hand, realised Sh8.4 million lower than what the local authorities in its jurisdiction generated in 2011/12.
The local authorities in Elgeyo Marakwet had collected Sh69.4 million while the county government had Sh61 million.
Embu County, which has been embroiled in leadership tussles that saw Governor Martin Wambora impeached in February 2014 before being reinstated pending court decision, had a shortfall of Sh105.8 million.
The local authority previously collected Sh274.3 million compared to Sh168.5 million.
In Garissa, the county government reported generating Sh35.9 million compared to the former local authority that had raised Sh66.6 million.
Governor Cyprian Awiti’s administration in Homa Bay County meanwhile failed to reach the levels of the former local authorities by Sh3.2 million while Isiolo County reported that local revenues had dropped by Sh43.1 million.
Similarly, in the county of Kirinyaga, Governor Joseph Ndathi’s government could only raise Sh200.4 million compared to Sh254.1 million collected by the former local authority, a difference of Sh53.7 million.
Kisii County’s collection meanwhile dropped by Sh86.2 million from the Sh336.3 million that the former area local authorities generated in 2011/12.
Kisumu County, which has been in the news lately over the incessant infighting between Governor Jack Ranguma and his deputy Ruth Odinga, had the largest difference with what the former local authorities were collecting.
The county reported having collected Sh621.9 million against Sh987.7 million the former local authorities had collected in 2011/12. This represented a difference of Sh365.8 million.
In Marsabit County, the difference between what the former local authorities were collecting and their successor devolved government generated was Sh21 million.
Nyandarua County, that difference was Sh88.5 million while in Siaya the county government collected Sh27.1 million less than the Sh126 million the former local authorities had collected in 2011/12.
For Taita Taveta, the former local governments collected Sh27.1 million more than the Sh126.9 million the county government had.
Another coastal county, Tana River, collected Sh31.6 million compared to Sh39.1 million by the former local authorities under it, representing a drop of Sh7.5 million.
Chairman of the Council of Governors Isaac Ruto said the reported variances could be the result of the challenges that county executives have been having with their assemblies.
“Sometimes the assemblies interfere with the tools the governors have employed for collection of revenues. For instance, a number of assemblies delayed vetting and approving some appointees and this could have an impact,” said Mr Ruto, who is the Bomet governor.
In any case, the amounts attributed to local authorities include money that came from the central government in the form of Local Authority Transfer Fund (LATF) and the Compensation in Lieu Rates (CiLRa) for the services the local authorities were rendering the central government, he said.
“I am not ruling out some one or two counties that may have done poorly because of extra-ordinary circumstances but the figures attributed to former local governments include these transfers,” he said.
Furthermore, Mr Ruto said the counties were still relying on the former local government staff to collect revenues “and they are not competent on the digital platforms we are expected to use”.
“We hope that with the recent Capacity Assessment and Rationalisation of the Public Service (CARPS) we will sort out the problem of staff. It is also important to appreciate that counties have not passed all the enabling legislation to make them achieve their potential,” he said.
In terms of the amounts the 47 counties actually generated against the targets they had set for themselves at the beginning of the 2013/14 financial year, there was a shortfall of Sh27.9 billion.
Surprisingly, Marsabit County whose collections fell below what the former local government authorities collected was one of the four counties that met and surpassed their targets.
Marsabit County surpassed its target for local revenue collection by Sh2 million.
This, however, does not explain why it collected less than what the former local government authorities previously under its jurisdiction collected.
Other counties that met or surpassed their targets for local revenue collection for 2013/14 financial years were Kericho by Sh32.7 million, Tharaka Nithi by Sh1.4 million and West Pokot by Sh21 million.
Conversely, the top 10 counties that did not meet their local revenue targets were Nairobi by Sh5.4 billion, Mombasa by Sh3.4 billion, Bungoma by Sh2.6 billion, Kakamega by Sh2.5 billion and Narok by Sh2.2 billion.
Others in the top 10 are Kiambu by Sh1.8 billion, Machakos by Sh1.4 billion, Nakuru by Sh1.3 billion, Kisumu by Sh1.1 billion and Migori which had a shortfall of Sh556.7 million.
For Mr Ruto, the chairman of the Council of Governors, the shortfalls could be a result of failure by the national government to approve and gazette the tools counties have proposed to maximise revenue collection.
Nairobi County is currently embroiled in a bitter dispute with Jambo Pay, the service provider it had contracted to collect parking fees on its behalf through the digital platform.
The service provider claims that it had collected Sh138 million in January this year which is seven times more than what the county used to collect before it contracted them.
On the other hand, Nairobi has accused Jambo Pay of inefficiency and under-declaration of the money it collects.