BY AHMED SALAT ALI AARAN TV KE POLITICAL AFFAIR
The Senate of Kenya and the Council of Governors (CoG) have struck a crucial deal aimed at resolving the long-standing stalemate over the equitable share of revenue allocated to counties for the 2026/27 Financial Year.
During a high-level consultative meeting involving the Commission on Revenue Allocation (CRA), the Senate Standing Committee on Finance and Budget and county leaders agreed to push for a significant increase in county allocations, moving away from the National Assembly of Kenya proposal of KSh420 billion.
The meeting, chaired by Ali Roba, also demanded a clear commitment from county governments on how they plan to settle the multi-billion-shilling pending bills owed to contractors and businesses.
Senators insisted that any additional funds allocated to counties must prioritise clearing these debts, which have placed immense strain on contractors and small businesses across the country.
“Whatever increase you receive above KSh415 billion must come with a commitment that a substantial portion will go toward settling pending bills so that contractors and businesses can breathe again,” Senator Roba said.
Beyond the debate over revenue figures, Senator Roba clarified the legal position regarding health funding, particularly resources meant to support the transition of the Universal Health Coverage (UHC) workforce to county governments.
He emphasised that once funds are included in the Division of Revenue framework, they cannot be treated as conditional grants but must be distributed through the constitutional revenue-sharing formula.
“Any funds included in the Division of Revenue cannot be tied to conditions for specific counties. Once it forms part of the equitable share, it must be distributed according to the law,” he stated.
Members of the Senate committee underscored that the debate was not merely about numbers but also about protecting livelihoods.
They noted that thousands of young entrepreneurs and suppliers continue to suffer due to delayed payments by county governments.
The national pending bills crisis currently stands at approximately KSh458 billion, with counties accounting for about KSh172 billion of the total.
CRA Chairperson Mary Chebukati supported the push for increased county funding, describing the National Treasury’s initial proposal as inadequate.
She noted that the proposed increase of only KSh5 billion cannot even cover mandatory annual salary adjustments of 5.8 percent.
Consequently, the commission recommended a revised allocation of KSh458.9 billion, factoring in revenue growth and KSh8.94 billion required to absorb UHC workers into county payrolls.
While senators appeared inclined toward a compromise figure of around KSh450 billion, CoG Chairperson Ahmed Abdullahi maintained that the real cost of running devolved government stands at KSh534.96 billion.
According to the governors, this figure includes KSh10.06 billion in remuneration arrears and KSh65.97 billion required to fund functions that have already been transferred from the national government but remain underfunded, particularly in the agriculture, health and water sectors.
A key element of the agreement is the full absorption of UHC staff into the counties’ permanent workforce.
The Senate committee resolved that the KSh8.94 billion set aside for their salaries must be released as an unconditional allocation to guarantee job stability for health workers from July 2026.
County leaders also urged the Senate to push the National Treasury to stop treating county allocations as a residual item in the national budget.
They argued that statutory funds such as the National Government Constituencies Development Fund (NG-CDF) and the National Government Affirmative Action Fund should be deducted from the national government’s share rather than from the total shareable revenue.
The emerging consensus between senators and governors is expected to guide upcoming negotiations in Parliament and could play a decisive role in shaping the final revenue allocation for the next financial year.
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