Senators are making a strong case for a Sh465 billion allocation to counties in the next financial year, citing increased non-discretionary expenses passed on by the national government as the key reason behind their push.

This demand has sparked a fresh clash with the National Assembly, which has approved a significantly lower figure of Sh405 billion.

The Sh60 billion disparity has set the stage for a potential budget standoff, with the risk of derailing the Division of Revenue Bill, 2025.

If unresolved, the dispute could trigger a prolonged mediation process, delaying budget approvals and further straining the already tense relationship between the two levels of government.

The Commission on Revenue Allocation (CRA) has recommended Sh417 billion allocation to the counties—falling between the two competing proposals.

In a report tabled in the Senate by the Finance and Budget Committee, senators argue that counties are being overburdened with national obligations, which justifies the need for increased funding.

The committee, chaired by Mandera Senator Ali Roba, evaluated the Division of Revenue Bill, 2025, which outlines how revenue raised nationally is to be shared between the national and county governments.

“An analysis of the Bill in light of the provisions of Article 203(1) of the constitution reveals that the specified mandatory expenditures make up 87.5 per cent of the estimated shareable revenue for FY 2025/26,” the report notes.

According to the committee, counties are being forced to shoulder non-discretionary expenditures amounting to Sh34 billion, imposed by national government directives.

These include Sh4.1 billion for the housing levy, Sh6 billion for National Social Security Fund contributions and Sh11.8 billion for County Aggregated Industrial Parks.

Others are Sh3.23 billion for community health promoter payments, Sh6.3 billion for IPPD annual wage increments and Sh3.5 billion for doctors’ salary increases under the 2017 CBA and return-to-work agreements.

In addition, the committee has proposed an allocation of Sh12.33 billion to marginalised counties through the Equalisation Fund.

However, the report laments the slow pace of disbursements, despite consistent parliamentary appropriations.

“As of June 2024, total disbursement to the Equalisation Fund stood at Sh13.4 billion out of the total entitlement of Sh62.4 billion.

With only five years remaining before the fund lapses under Article 204(6), its objectives remain far from being achieved,” the report states.

The senators also highlighted that the county equitable share has historically averaged 2.23 per cent of GDP. With the GDP for FY 2025-26 projected at Sh19.27 trillion, the Senate argues that this percentage should be maintained—translating to approximately Sh465 billion.

Governors have also voiced their discontent, arguing that the proposed Sh405 billion allocation fails to reflect inflation, the scope of devolved functions and increasing demand for county services.

Kakamega Governor Fernandes Barasa, who chairs the Council of Governors' Finance Committee, termed the National Assembly’s figure “unacceptable.”

“There should be a transfer of state-owned parastatals that are performing devolved functions, along with the attendant resources,” Barasa said, accusing the national government of deliberately weakening devolution by clinging to functions and funds meant for counties.

If consensus is not reached, the impasse could once again lead to a lengthy mediation process—delaying vital county funding and disrupting service delivery across the country.