The Commission on Revenue Allocation (CRA) has proposed that County Governments be allocated KSh 321.74 billion during the 2020/21 financial year.
The Commission is also working with National Treasury to forestall any stalemate, as it happened last year when parliament, National Treasury and the Senate, could not agree on amounts of money that should be allocated to County Governments.
Treasury has proposed any divergent recommendations between, Treasury, CRA, Council of Governors and all other actors, will be sorted through engagements under the auspices of the Intergovernmental Budget and Economic Council (IBEC).
“These engagements will among other things, seek to avert a stalemate in the 2020/21 division of revenue process, the kind that took place last year,” says the 2020 Budget Policy Statement.
Consensus at the IBEC level will pave way for an early approval in Parliament of Division of Revenue Act as well as the County Allocation of Revenue Act, thus enabling timely commencement of budget implementation activities at both levels of Government.
While submitting its 2020/21 financial year Division of Revenue recommendations to parliament, the CRA proposes to increase allocation to National Government, to KSh 1.56 Trillion.
In arriving at this proposal, CRA has adjusted the 3-year average development spending for each level of Government by 5.7 percent -the country’s GDP growth rate over the period 2016/2018.
Further, in CRA’s proposal, the National Government’s allocation includes KSh 71 billion “for the purpose of investing in the strategic areas under the “Big Four” Plan.
As per the 2019 Budget Review and Outlook Paper (BROP), the National Treasury proposed that County Governments be allocated KSh 317.8 billion as their equitable revenue share for the 2020/21.
In the Medium term draft 2020 budget policy statement, titled Unlocking Economic Potential by Harnessing “THE BIG FOUR”, National Treasury proposes allocation of Ksh 317.8 billion to the Counties.
The proposed allocation represents a Ksh 1.3 billion increase from the FY 2019/20 allocation of KSh 315.5 billion. It is also equivalent to 31 percent of the last audited accounts i.e. KSh 1.038 billion for 2014/15) financial year as approved by parliament.
The proposed allocation also meets the requirement of Article 203(2) of the Constitution.
National Treasury said its proposal is informed by ordinary revenue underperformance witnessed in recent years.
In addition Treasury’s proposal on equitable share of revenue says County Governments will receive additional funds as conditional grants.
These include KSh 14.5 billion from the National Government for level-5 hospitals; rehabilitation of village polytechnics; leasing of medical equipment; compensation for foregone user fees; and construction of County headquarters.
Equalization Fund will disburse KSh 6.5 billion to marginalized areas while KSh 9.4 billion will be disbursed from the Road Maintenance Fuel Levy Fund (RMLF).
As in previous years, this is calculated at 15 percent of projected 2019/20 collections by the Kenya Roads Board (KRB).
Counties will also receive KSh 30.2 billion from external loans and grants, which will finance devolved functions in accordance with the signed financing agreement for each loan/grant.
