Governors reacted angrily to a report released on Wednesday that indicated they were unable to spend Sh182 billion out of the Sh269 billion allocated to counties for the financial year that ends on June 30, 2014.

They read mischief in the report by the Office of the Controller of Budget (OCoB).

It showed that out of Sh86.7 billion spent by county governments, only a paltry Sh12.1 billion was earmarked for development.

About Sh74.6 billion went to salaries and car purchases and foreign trips, among other recurrent expenditures, according to the report.

But the governors blamed what they said were deliberate delays by the National Treasury to release funds in order to portray them as incompetent as bureaucratic procurement procedures hampered spending.

They said the unspent funds will finance ongoing projects and won't be returned to the National Treasury.

Yesterday, Chairman of the Council of Governors Isaac Ruto (Bomet) said the National Treasury was being mischievous because it only released the last allocation to the counties last week, and therefore the report was misleading.

However, the "Progress Report on Revenue and Expenditure for County Governments' released by CoB was for the period between July 2013 and March 2014 and did not include the last quarter.

Ruto said development funds released from the National Treasury to counties will not be returned as the money has already been budgeted for and is in the counties' bank accounts.

"How do you return money already budgeted for? It cannot happen," said Ruto.

He explained the monies had already been earmarked for projects some of which were already completed, but contractors were yet to be paid.

He also complained of the manner in which the Treasury was handling information regarding expenditures by county government alleging a calculated move to portray governors as ineffective in the management of public resources.

"These misleading reports are calculated to portray governors as ineffective, which is not true," said Ruto of the report by Controller of Budget Agnes Odhiambo.

Marsabit Governor Ukur Yatani, whose county was named as having the highest unspent funds (Sh1.2 billion) said the report was a "total fabrication and did not reflect the reality."

Mr Yatani cited dishonesty given the fact that counties pay only for projects which are completed and the funds in the accounts are committed to ongoing projects.

"This is really misleading because the Treasury knows very well we do not pay contractors upfront, but after completion of work," he said, adding that "for some of us in far-flung areas, it takes up to two weeks for the finance officers to get approvals in Nairobi,".

Yatani said the process of releasing the money was also very tedious because of the bureaucracies by the Treasury.

"The report by the CoB is a month old and not up to date. Right now, payments are being made and we are still within the deadline for expenditure," Yatani said referring to June 30 when the financial year closes.

The Governor said his county experienced serious insecurity, which only reduced recently, and there was little development spending because most efforts were targeted at addressing insecurity.

Yatani said the National Treasury should come up with systems to allow automatic reimbursements and release of money.

Nakuru Governor Kinuthia Mbugua was furious that the report said his government did not spend Sh1.1 billion.
He said it was only on June 25 that the National Treasury released Sh588 million to contractors for various projects.

"The report by CoB is misleading and meant to cause uproar in counties, making it look like the governors have failed in discharging their mandate. The National Treasury and the CoB must act professionally in discharging their duties," said Mr Mbugua.

He explained another Sh400 million in the county's bank account was for ongoing projects, while another Sh115million is to be collected this financial year.

"Releasing such information to the public leaves an impression that governors were holding money yet residents in counties were suffering for lack of essential services which is not the case," said Mbugua.

Nyeri Governor Nderitu Gachagua said the Sh671 million said to be lying idle at the Central Bank "was already committed to various projects."

"We have nothing in our accounts at Central Bank since all this money is committed to several development projects. We are only waiting for clearance certificates to pay contractors once they have finished their work," Mr Gachagua said.

The governor said Mrs Odhiambo is privy to the stringent requirements in procurement "where you are penalised if you release any money outside the regulation."

"In fact we need the Treasury and the Controller of Budget to assist in streamlining the procurement procedures to remove all these bureaucracies. The National Government should support us on this," said the governor.

Bungoma Governor Kenneth Lusaka also cited poor procurement laws and procedures for slow absorption of funds.

"County governments are not unable to spend cash but the delay in utilisation is as a result of the extensive procurement process," said Lusaka when asked why he is yet to spend Sh965 million.

"The money will be preserved at the Treasury revenue account and we shall still use it for the intended purpose,'' said Lusaka.

He said counties were spending large amounts on salaries because of the huge wage bill they had inherited from the defunct local authorities.

He also took issue with National Treasury for releasing funds meant for counties rather late.
Murang'a Governor Mwangi wa Iria refuted claims that his government had not spent Sh502 million allocated to it by the National Treasury.

He faulted CoB saying his government is still waiting for Sh300 million that was to be remitted yesterday.

"We have not received the last allocation from the Treasury yet we are accused of having failed to spend the money. The report is misleading and needs to be corrected by the Controller of Budget," said Wa Iria.

"There is no single coin in the county accounts only to be accused of having failed to spend Sh502 million, which is misleading," he added.

Kirinyaga Governor Joseph Ndathi said although it was indicated in the report that his government had not spent Sh442 million, only Sh230 million has not been committed to any development project.

"If you look at our vote book, you will find out that out of the said Sh442 million, only Sh230 million will be returned since we have since committed Sh212 million to an ongoing project," Ndathi said.

He said the unspent funds will be re-voted by the County Assembly for the specific projects the money was meant for during the 2014/2015 financial year. But he acknowledged that lack of various professionals was hampering execution of projects.

He said the county does not have an architect, engineer and quantity surveyor, making most of the technical works to go at a snail's pace.

"By next month, we should be having our own professionals since the recruitment is on-going and we also have advertised for the positions of Chief Procurement Officer who will work closely with the engineers we are about to hire," he said.

The governors have admitted that they were facing challenges in the use of the Integrated Financial Management System.

They also complained of delayed disbursement of funds from the National Treasury and delays in reimbursement of salaries paid to devolved staff by the National Government.