The Council of Governors (CoG) has rejected proposals fronted by the Kenya Kwanza administration on a revenue-sharing formula between the two levels of government.
In a statement released on Tuesday, February 6, the council noted that the budgetary allocation proposed by the National Treasury and the Commission on Revenue Allocation (CRA) fails to sufficiently address county needs.
The council wants the new Social Health Insurance Fund (SHIF), National Social Security Fund (NSSF) and the suspended housing levy, to be factored in the new formulae, arguing that they are subjected to the deductions like any other employer.
CoG has in the past weeks engaged with members from the National Treasury and the Commission for Revenue Authority (CRA) in a task force formed to deliberate the way forward.
County governors following proceedings of Devolution Conference at Eldoret, Uasin Gishu County on Wednesday, August 16, 2023.
Council of Governors
“We note with concern that after lengthy discussions and analysis of the recommendations by the task team maintain divergent positions on their proposed figures for sharable revenue,” the council through its chairperson Anne Waiguru stated.
The government in new directives, will deduct 2.75 per cent under the SHIF program and 1.5 per cent of the gross pay, with the employer contributing a similar amount, for the housing levy deductions, with the latter pending the determination of a court case.
The council proposed Ksh41 billion more than the Treasury’s proposal, which is Ksh398.14 billion while the CRA proposed Ksh391 billion.
“We urge our proposal of Ksh450 billion to counties be adopted,” the communique by CoG read.
Further defending the budget, CoG argued that the provision for an allocation towards county employees’ annual salary increment cost was necessary, and so was a commensurate adjustment for revenue growth.
Other reasons cited include the need to ensure county governments are cushioned from the rising cost of inflation across various devolved sectors and the rising operations and maintenance costs.
“We therefore call upon the National Government to reconsider its position in view of the aforementioned budgetary items.
“This will allow Counties to execute their mandate and ensure efficient service delivery on their assigned functions,” Waiguru who doubles as Kirinyaga Governor emphasised.
Kirinyaga Governor Anne Waiguru chairs a Council of Governors meeting on Thursday, October 6, 2022