Council of Governors chairman Muthomi Njuki/ HANDOUTGovernors have accused the National Treasury and the Commission on Revenue Allocation (CRA) of shortchanging counties through what they termed a deliberate scheme to suppress their funding.
The county bosses are demanding at least Sh500 billion in equitable share allocations for the 2027-28 financial year.
The Council of Governors (CoG) said the CRA’s recommendation of Sh440.84 billion was inadequate to meet counties’ obligations, including salary increases, collective bargaining agreements (CBAs) for health workers and the absorption of Universal Health Coverage (UHC) staff.
The governors also questioned the use of audited and approved national government accounts for the 2022-23 financial year to determine allocations for 2027-28.
They argued that the approach failed to reflect revenue growth and unfairly favoured the national government.
CoG chairperson Muthomi Njuki, who is also the Tharaka Nithi governor, accused the Treasury of being partisan in determining how national revenue is shared between the two levels of government.
“This is the first time that I've seen CRA making the same recommendation as the National Treasury,” Njuki said.
“The Treasury is partisan. If you have two levels of government that are sharing resources, there should be an independent adjudicator but not one of them.”
Njuki was speaking on Wednesday during the council’s meeting with the commission at Serena Hotel to discuss the CRA’s proposed allocations to counties for the next financial year.
He said the constitution’s requirement that counties receive at least 15 per cent of nationally raised revenue should not be confused with revenue growth.
He argued that the current formula was based on figures that did not reflect the country’s recent economic performance.
Njuki questioned why accounts dating back to 2022-23 were being used to determine funding for 2027-28 when more recent financial records were available.
“How do you use audited accounts of the year 2022-2023, when we are allocating resources for 2027-2028, almost five years later? It practically means that we do not have any audited accounts of the Kenya Kwanza administration, or maybe the first ones,” he said.
Njuki said counties needed additional funding to meet their financial obligations, warning that inadequate allocations would undermine service delivery.
He said counties required an additional Sh21 billion to implement salary increases recommended by the Salaries and Remuneration Commission (SRC), Sh2 billion for health workers’ CBAs and Sh8.6 billion to absorb UHC staff.
He said the additional funding requirements amounted to about Sh36 billion, excluding resources needed for functions transferred from the national government.
“Even if the national government could not immediately provide the entire Sh65 billion required for unbundled functions, counties should receive at least half of that amount,” he said.
“We are not looking at anything less than half a trillion, Sh500 billion, if the next cycle of governors are to be effective in delivery of services,” he said.
The governors also argued that allocations to the Equalisation Fund should not be presented as additional funding for all 47 counties, as the fund targets marginalised areas.
CRA chairperson Mary Chebukati defended the commission’s proposal, saying it was guided by constitutional requirements and the latest audited and approved accounts available.
Chebukati said Article 203(2) of the Constitution required county allocations to be at least 15 per cent of nationally raised revenue, calculated using the most recent audited and approved accounts.
“The revenues are for the year 2022-23, but we want to make it clear that what we are now recommending is an equivalent of 21.5 per cent, which is above the 15 per cent,” she said.
The commission has recommended Sh2.798 trillion for the national government and Sh440.84 billion for counties in 2027-28, alongside Sh10.25 billion for the Equalisation Fund.
The proposed county allocation represents an increase of Sh12.84 billion, or three per cent, from the Sh428 billion allocated in the current 2026-27 financial year.
The national government’s allocation would increase by Sh250 billion, from Sh2.548 trillion.
However, CoG Finance Committee chairman Fernandes Barasa, who is also the Kakamega governor, dismissed the approach, accusing the Treasury of deliberately using outdated financial statements to constrain county allocations.
“The National Treasury uses the latest audited and approved financial statements as a cash flow management strategy,” Barasa said.
He argued that counties had already undergone audits for the 2025-26 financial year, with the audited statements expected before the end of the calendar year.
Barasa said increases in national revenue did not necessarily translate into corresponding increases in county allocations, leaving devolved units struggling to meet their wage bills and other obligations.
He urged the Treasury to adopt activity-based budgeting rather than incremental budgeting, saying allocations should reflect the actual cost of delivering services, particularly salaries and employment obligations.
“When you have industrial unrest, there'll be no work. The economy where 47 governments are not working, that should be a key consideration,” Barasa said.
INSTANT ANALYSIS
The dispute exposes a growing fault line in the devolved system, with governors accusing the Treasury of using outdated revenue figures to constrain county funding. While the CRA insists its Sh440.84 billion recommendation exceeds the constitutional minimum, counties argue that rising wage bills, health workers’ CBAs and transferred functions require more resources. The underlying question is whether revenue-sharing calculations reflect current economic realities or leave devolved governments struggling to deliver essential services.
