The Parliamentary Budget Office has accused the Treasury of breaching legal obligations by proposing reduced funding for devolved governments in the 2019-20 financial year. The office claims the planned Sh310 billion allocation to counties violates the Division of Revenue Act 2018, which mandates that revenue shortfalls be absorbed by the national government rather than devolved units.
Treasury Secretary Henry Rotich's Budget Policy Statement cited national revenue shortfalls and rising debt costs as justification for the Sh4 billion reduction from the current year's Sh314 billion equitable share. However, the Parliamentary Budget Office argues this approach disregards the Commission on Revenue Allocation's (CRA) recommendation of Sh335.7 billion, which accounted for inflation adjustments using a 6.91% three-year average.
The proposed budget would lower total county funding to Sh371.6 billion from Sh376.48 billion, with CRA chairperson Jane Kiringai warning that the 2.7% GDP-based allocation fails to reflect national economic growth. 'The higher the economic growth, the less counties receive,' she stated during a Senate Finance Committee hearing, emphasizing the constitutional requirement for stable revenue distribution.
The Treasury's plan faces scrutiny for allegedly violating Section 5(1) of the 2018 DORA, which stipulates that revenue shortfalls must be borne by the national government. The dispute highlights tensions between fiscal austerity measures and constitutional mandates for equitable resource distribution to Kenya's 47 counties.
