Nairobi — An impasse between the National Assembly and the Senate over the equitable revenue share to devolved units in will now head to mediation following conflicting decisions on the matter.
MPs voted for the counties to receive an allocation of Sh380 billion as proposed National Treasury with the latter citing fiscal deficit challenges following the withdrawal of the Finance Bill 2024, a revenue raising bill.
Twenty-eight Senators present during the vote unanimously opposed the revised Division of Revenue Bill maintaining that any slash of revenue shared to counties will adversely affected devolution.
The standoff now threatens to delay the passage of the revised Division of Revenue Bill 2024, which splits nationally generated funds between the national and county governments.
The bill will now head to a mediation committee comprising members of both houses to seek a compromise.
President William Ruto haddeclined to sign Allocation of Revenue Bill, (CARA) 2024 and instead opting to return it to the Senate for reconsideration.
In a Presidential Memorandum accompanying the Bill in August, the President called on the Senate to amend the Bill and reduce the shareable revenue due to counties in the financial year 2024/2025 from Sh400.1 billion to Sh380 billion.
However, Senators have fiercely opposed the Sh20 billion cut, highlighting essential programs tied to non-discretionary expenditures -- totaling Sh39.9 billion and which they say are linked to national government projects -- will be severely affected.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
Senate Finance Committee Chairperson Ali Roba cited government initiatives like the housing levy, county health worker employment, the leasing of medical equipment, and National Social Security Fund deductions as some of the key programs at risk.
Senators are instead pushing for the withdrawal of the National Government Constituency Development Fund (NG-CDF), arguing it is unconstitutional and the funds should insteadbe directed to counties.
Disbanding NG-CDF
A three-judge bench comprising Justices Kanyi Kimondo, Mugure Thande, and Roselyne Aburili cited failure by the National Assembly to consult the Senate when the Act was enacted.
MPs have vowed to appeal the decision at the Court of Appeal. They will also seek a stay order pending the outcome of the appeal.
The unfolding events are nothing unprecedented as a similar incidents unfolded in 2017 and 2020 where the two houses locked horns on the equitable revenue share to counties.
Speakers of the two houses will now refer the matter to mediation, which will further delay passage of the Bill.
Parliament will constitute a committee of an equal number from either house to strike a consensus.
With the Bill being the sole anchor for the disbursement of funds to counties, the National Treasury has received a nod from the Attorney General to release 50 per cent of the funds to counties as an administrative maneuver to avert a crisis.
