The Council of Governors is demanding Sh534.4 billion as the equitable share for counties in the 2026–27 budget.
This sets the stage for a fresh standoff with the National Treasury over revenue division.
The amount represents an increase of Sh106.97 billion from the current allocation.
It is significantly higher than both the Sh458.74 billion proposed by the Commission on Revenue Allocation and the Sh420 billion recommended by the Treasury in the Budget Policy Statement.
Governors say the additional funds are necessary to cater for new devolved responsibilities, transition of Universal Health Coverage workers, salary reviews for county staff and transfer of functions from the national government.
According to the CoG, the proposed increment comprises Sh35 billion for revenue growth and Sh8.94 billion for the transition of UHC workers to county payrolls on permanent and pensionable terms.
It also includes Sh10.06 billion for the implementation of the third and fourth remuneration and benefits review cycles, and Sh65.97 billion tied to the first phase of delineated and gazetted devolved functions.
The push comes as shareable revenue is projected to rise from Sh2.6 trillion to Sh2.98 trillion in the next financial year, an increase of Sh342.6 billion.
In its recommendation, the CRA proposed that Sh2.5 trillion be allocated to the national government and Sh458.7 billion to counties as an equitable share, while also setting aside Sh9.6 billion for the Equalisation Fund to support marginalised regions.
However, the National Treasury, in the draft BPS, proposed Sh420 billion for counties — a modest Sh5 billion increase from the current allocation — attributing the adjustment solely to revenue growth.
Governors have rejected the figure, arguing it fails to reflect the expanding mandate of counties and the country’s projected economic growth of 5.3 per cent in 2026 and 2027.
They maintain that, with the anticipated revenue increase, counties should receive at least Sh35 billion from the additional collections, noting that the national government is set to take the lion’s share of the increment.
The CoG further accuses the CRA and Treasury of failing to allocate funds for the transfer of devolved functions already identified and confirmed for handover to counties.
On the transition of UHC workers, governors said contracts for thousands of health workers will lapse between April and September 2026, necessitating immediate budgetary provision.
“The Ministry of Health, in consultation with the Council of Governors, agreed that the workers will be transitioned to county governments in the 2026–27 financial year on permanent and pensionable terms, with the budget transferred through the Division of Revenue in perpetuity,” the council said in a statement.
They said the Health ministry had confirmed the availability of Sh8.94 billion for the exercise, which was ratified at the 12th National and County Governments Coordinating Summit.
“This is a non-discretionary expenditure item and should be provided for in the Division of Revenue Bill as a matter of priority,” the governors said.
The county chiefs also raised concern over the delayed implementation of the Salaries and Remuneration Commission (SRC) pay reviews, saying counties are in arrears for both the third and fourth cycles.
According to the SRC, the final phase of the third cycle requires Sh4.77 billion, while the first phase of the fourth cycle requires Sh5.28 billion.
Governors warned that failure to implement the reviews has already triggered industrial unrest among county workers and could escalate if not addressed.
“The national government has already implemented all cycles, leaving counties behind. This is discriminatory and has sparked industrial action by various county public officers,” the statement read.
The CoG insists that at least Sh65.97 billion should be transferred to counties alongside devolved functions in the first phase, saying the funds have already been identified across several national government ministries, departments and agencies.
The latest demands are expected to intensify negotiations over the Division of Revenue Bill, with counties pushing for a larger share to match their growing responsibilities amid mounting service delivery pressures.
INSTANT ANALYSIS
Governors are demanding Sh534.4 billion for the 2026-27 equitable share, far above the Sh420 billion proposed by the Treasury and Sh458.7 billion by the CRA, citing new devolved functions, UHC staff absorption and pending salary reviews. The dispute reflects a widening national–county fiscal standoff, with counties arguing revenue growth and expanded mandates justify a larger allocation. Treasury’s lower figure signals tight fiscal space, setting up tough Division of Revenue Bill negotiations that could delay budget timelines and strain service delivery if unresolved.
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