Treasury slashes Sh7bn from CRA’s allocation to counties

Written by on February 21, 2024

The National Treasury has slashed by Sh7 billion the Commission on Revenue Allocation’s proposed allocation to the county governments in the next financial year.

In the move that has triggered anger in the Council of Governors, the Treasury has allocated the devolved units Sh391.11 billion in equitable share, down from Sh398.14 billion proposed by CRA.

In addition, the counties have also been allocated Sh19.06 billion in additional allocation financed from revenues raised nationally.

This includes Sh10.93 billion from the Road Maintenance Levy Fund.

“Whereas the Treasury has adjusted the base equitable share for 2023-24 of Sh385.42 billion by netting off an allocation of Sh10.99 billion to RMLF in 2024-25 as reported by Roads Board, CRA has adjusted it by Sh9.8 billion,” the bill states.

The allocation is contained in the draft Division of Revenue Bill, 2024 submitted to Parliament by Treasury CS Njunguna Ndung’u.

“The Bill proposes to allocate county governments Sh391.1 billion for the financial year 2024-25 as equitable share of revenue raised nationally, from the current allocation of Sh385.4 billion,” the Bill states.

However, the allocation has angered governors who argue that the proposal is not commensurate to the high cost of living and the projected revenues.

The county chiefs are demanding Sh450 billion in the next financial year.

“in the view of the foregoing and upon careful consideration of the matter at hand, the council hereby declares a stalemate on the discussions around vertical sharing of revenue,” CoG chairperson Anne Waiguru said.

She added, “In this regard, we urge that our proposal of Sh450 billion to counties adopted.”

Waiguru argued that the counties need to be cushioned from rising cost of inflation across devolved sectors, rising operations and maintenance in counties and commensurate adjustment for revenue growth.

The CoG boss also said the allocation should be adjusted upwards to provide for employee’s annual salary increment cost.

In the last financial year, the county bosses asked for Sh407 billion, but the Executive and Parliament eventually gave them Sh385.5 billion in equitable share.

This was despite fierce fight by Azimio to give the devolved units Sh407 billion as Kenya Kwanza senators capitalised on their numbers to push through their way.

“The money sent to the national government should have been sent to the county governments to employ health workers who came before the Senate crying to be employed,” Nairobi Senator Edwin Sifuna had said.

However, the Treasury reasoned the allocation to counties is equivalent to 24.86 per cent of the actual revenues raised nationally of 1.57 trillion for 2019-20.

“However, the last audited revenue raised nationally as approved by the National Assembly is Sh1.67 trillion implying an overstatement of Sh10 billion,” the Bill states.

CRA argued that its proposal of Sh398 billion is based on various factors including projected revenue growth as well as inflation.

“The allocation of Sh396.05 billion is equivalent to 23.7 per cent of the most recent audited and approved accounts,” CRA chairperson Mary Chebukati said late last year

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