Counties, CRA reach deal on funds, governors’ chair Isaac Ruto had cautioned of ramifications

Council of Governors chairman Isaac Ruto. PHOTO: FILE

NAIROBI: County governments got a reprieve after the High Court allowed them to access half of their equitable share of funds from the national government, just a day after warning that they were unable to pay July salaries.

The relief came after county assemblies filed a case challenging legality of a decision by the Commission for Revenue Allocation (CRA) to set budget ceilings.

However, Friday, Members of the County Assemblies (MCAs) reached a consent with CRA, unlocking an impasse partly blamed for delaying the release of funds to devolved units.

Council of Governors chairman Isaac Ruto had raised the alarm on Thursday, saying the delay would impact negatively on delivery of services at the county governments.

Justice Isaac Lenaola ruled that the consent registered between the two parties was for the interest of the operations of the county governments.

“The CRA is hereby directed by consent to release 50 per cent of the county budgetary allocation to allow smooth operations of county businesses, pending the hearing and determination of the case inter-parties on August 28, 2014,” said Justice Lenaola.

This means county governments will access funds from the national government once CRA gives the Controller of Budget a nod to release the money.

Technically though, the earliest the county governments can access funds could be Thursday next week assuming the Senate will unanimously pass the crucial County Allocation of Revenue Act (CARA), which sets out the sharing formula of the Sh226 billion among the 47 counties.

Kisii Governor James Ongwae said passage of the Act will give legal effect on how counties will ultimately share the national allocation, which has been increased by Sh36 billion down from last year’s allocation. “We urge the Senate to convene a special session to expedite the passage of the Act to avert a financial crisis,” he said.

The Controller of Budget cannot disburse funds to counties unless the Act is is passed by the Senate because while every county gets fixed amounts, CARA guides further allocations depending on the individual county’s population, poverty index and land area.

Parliament on Thursday night, moved swiftly to unlock a financial crisis facing county governments by passing the Division of Revenue Bill.

Governors were Friday pleading with the Senate and MCAs to urgently pass the CARA and the Appropriation Bills respectively.

Wajir Governor and Chairman of the Finance and Economic Affairs Committee of the Council of Governors Ahmed Abdullahi Mohamed urged the MCAs and the Senate to expedite the process.

“We want to urge the MCAs and the Senate to do their part and expedite the process. We are grinding to a halt unless all of us do their respective roles urgently,” said Ruto who is also the Bomet Governor.

He said budgets were at different stages of approval and the delay may cause huge losses and affect service delivery if MCAs and the Senate do not move faster to arrest the situation.

County chiefs had warned that crucial services like health would grind to a halt with hospitals likely to run out of medical supplies, a crisis that could lead to deaths and suffering.

The Standard has reliably established that the Controller of Budget rejected some budget estimates from 44 counties for exceeding the ceiling set for spending, a bone of contention that has forced MCAs to decline to pass the revised budget estimates prepared by county Executive members in charge of Finance.