Senators want Treasury Cabinet Secretary Ukur Yatani to ensure that Sh316.5 billion allocated to county governments is disbursed in full before the end of the current financial year or face unspecified consequences.
Without detailing the nature of sanctions, senators Mutula Kilonzo (Makueni), Moses Kajwang (Homa Bay) and George Khaniri (Vihiga), speaking separately hours after Mr Yatani announced the disbursement of Sh43.5 billion to counties for April 2021, castigated the national government for suffocating devolution.
The lawmakers said that with four days to the end of the financial year, the framework the Treasury is applying in disbursing county funds is “very untidy”.
Mr Kilonzo specifically noted that delayed disbursements make a mockery of the Constitution and the 2020 cash disbursement schedule.
“In passing Article 219 of the Constitution, the people of Kenya believed that money approved for release to counties would be ring-fenced and sent timely without deductions,” he said.
Article 219 provides for timely disbursements to counties of the equitable share of revenue generated by the national government.
The County Allocation of Revenue Act (Cara) 2020 stipulates a clear structure for the horizontal sharing of resources as guided by the Division of Revenue Act 2020.
The 2020 County Governments Cash Disbursement Schedule generated by the Treasury and enacted by Parliament in line with the Public Finance Management (PFM) Act and the Constitution stipulates that resources to counties be disbursed by the 15th of every month.
This means that the national government still owes counties money for the months of May and June 2021.
The release of Sh43.5 billion came just days after governors threatened to shut operations in their counties over lack of funds to pay salaries and deliver critical services.
On June 14, warning that operations in counties would grind to a halt owing to delayed disbursements, Council of Governors chairman Martin Wambora (Embu) claimed that the Treasury owed Sh102.6 billion to the devolved units.
But yesterday, Mr Wambora was “grateful” to the Treasury for the disbursement, noting that the funds are critical in paying salaries and ensuring that critical services like health are provided.
“For this, I want to thank CS Yatani for his show of goodwill to our request,” he said in the statement.
This now means that the national government still owes counties Sh58.91 billion, which Mr Wambora wants released by next week “so that counties can utilise it to pay pending bills”.
Current financial year
But Mr Kajwang, who chairs the Senate’s Devolution Committee, questioned the sincerity of the Treasury in following the law.
“The National Treasury has four working days to redeem itself by ensuring that the monies allocated to counties are disbursed before the current financial year ends,” he said.
The current financial year ends on June 30.
“Mr Yatani cannot choose which parts of the law to follow and which ones to ignore. He cannot claim stressed revenue collection as the cause for the delayed disbursement. The Constitution says any shortfall in revenue collection shall be borne by the national government,” he said.
Mr Kajwang’s fear is that delayed disbursements mean that pending bills will continue to accumulate.
“The National Treasury is the cause of the pending bills that it is trying to cure. It is making the pending bills acute. The suppliers should be obligated to demand that the National Treasury pay what is owed to them.”
Prioritise payments to suppliers
The release of the funds, however, came laden with conditions, with Mr Yatani urging counties to prioritise payments to suppliers.
“The payment of these pending bills will be closely monitored and future transfers weighed against the fulfillment of this important obligation to the private sector,” he said in a June 23 statement announcing the disbursement.
Mr Khaniri, the Vihiga senator, said the Jubilee administration’s commitment to promoting devolution has “always been suspicious”.
“I have never understood why the National Treasury likes undermining devolution. But even as it strives to kill the spirit of devolution, it should be told that the Kenyans who toil to pay taxes belong to counties,” he said.
Council of Governors vice-chairman James Ongwae (Kisii) said that the Treasury’s financing of counties is not a favour but a constitutional obligation that must be complied with.
“The taxpayer in the county is also entitled to timely service delivery. The continued delay in disbursement is eroding gains made in devolved governance and affecting economic growth in counties,” he said.