The National Assembly and the Senate are on a collision course after the former approved the Division of Revenue Bill 2023, which allocates county governments Sh385 billion in the 2023/24 financial year.
The Bill was introduced, debated and passed by the National Assembly in the same sitting yesterday afternoon.
The proposed equitable share to the counties is 24.5 per cent, which is above the constitutional provision of at least 15 percent of the last audited accounts of revenue of the national government, which is the Sh1.67 trillion in for the 2019/20. It is also Sh15 billion more compared to what was allocated in the current financial year.
The counties have also been allocated Sh44 billion in conditional allocations and Sh4.7 billion to construct industrial centres and parks.
Interestingly, the report of the Budget and Appropriations Committee (BAC) on the Bill was tabled for debate even before the Bill was introduced in the House or read a first time as required by the Standing Orders. The Bill now awaits transmittal to the Senate for concurrence.
However, the Senate and the Council of Governors (CoG) have been unanimous that they will not accept anything less than Sh425 billion.
If the two sides maintain their hard-line positions on what should be the equitable share to the counties, there is a likelihood that the passage of Bill will take longer.
This is because the Senators are likely to amend it and enhance the allocation. If they do this and the National Assembly fails to agree with the changes, the Bill will head to the mediation committee that consists of an equal number of members from the two Houses.
The committee will have 30 days to deliberate and develop a mediated version of the Bill for concurrence by the two Houses.
If the mediation committee fails to come up with an agreeable version, the Bill will stand lost, plunging the two levels of governments into a financial crisis that would see operations and delivery of critical service like health, security and water among others, grind to a halt.
This is because the National Treasury cannot publish budget estimates for the national government and present them to the National Assembly by April 30, or at least 30 days to the end of the financial year, for passage before the Division of Revenue Act is in place.
Yesterday, members of the National Assembly, while debating the BAC report on the Bill, urged their Senate colleagues to see the sense of passing the Bill as it is.
Kiharu MP Ndindi Nyoro, who chairs BAC, urged senators to pass the Bill without amendments noting that the allocation to counties considered the high level of debt financing by the national government “as well as elevated debt risk”.
“The senators had based their enhanced revenue allocation to the counties on the projected revenue collection in the current financial year,” said Mr Nyoro as he challenged the county governors to enhance their own-source revenue collection.
“The national government is doing all it can to enhance its revenue collection. Counties have powers to levy taxes. They must enhance their capacity to raise their own revenue collection,” he said.
The National Treasury did not disburse Sh29.6 billion to the counties in the 2021/22 financial year due to financial constraints caused by limited access to finance in the domestic and international markets.
Other than the shareable revenue, the Bill, among others, also sets out the resources for emergencies and national interests, which include enhancement of security operations, youth empowerment, social safety nets, financing for constitutional commissions and independent offices and school examination fees.