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Treasury proposes 0.4 percent budget cut for counties

National Treasury building in Nairobi. Photo/Courtesy

Counties are staring at harder times as the National Treasury plans to reduce the 2019-2020 budget by 0.4 per cent.

The proposal that will see governors decry is contained in a detailed draft 2018 Budget Review and Outlook Paper.

State has been increasing allocations to the devolved units every year since the advent of devolution six years back but the current move is set to reduce county allocations.

“The National Government expenditures funded from domestic resources are projected to decline by 1.2 per cent of GDP,” says Treasury Cabinet Secretary Henry Rotich in the paper, which is a crucial document linking policy, planning and budgeting.

In the 2017-2018 financial year, counties received a total of Sh341 billion, where equitable share from national government revenue was Sh302 billion while other funds were conditional allocatication.

It is being fronted as one way of curbing overspending of public funds.

Equitable share
The 47 counties received Sh376 billion in the 2018-2019 financial year, with equitable share from the State being Sh314 billion.

In terms of equitable share, this was a four per cent increase from Sh302 billion in 2017-2018 to Sh314 billion in the current year.

The Constitution provides a 15 per cent minimum equitable share of revenue for counties from the national government.

“The allocation to county governments is projected to decline by 0.4 per cent of gross domestic product (GDP) from 3.7 per cent in 2018-2019 financial year to 3.3 per cent in 2019-2020,” adds Mr Rotich.

This means counties in the 2019-2020 financial year will receive less than Sh314 billion of equitable share from the State.

The cash crunch in the country has also been attributed to the taxman’s continued inability to meet revenue collection targets, leading to a huge deficit of more than Sh600 billion to finance the multi-trillion shilling budget.

“As the preparations for the 2019-2020 financial year Medium Term budget commence, it is worth noting that the economy is on recovery after experiencing challenges with revenue collection caused by prolonged electioneering period and drought with elevated expenditure pressures in 2017-2018,” explains the CS.