THE COUNTY ALLOCATION OF REVENUE BILL, 2026
Status Timeline
Proposed
Done ยท 15 Sep 2026
Public Review
Done
Debate
Done
Executive
Done
Enacted
Active now
KSh 428 Billion Allocated Across 47 Counties
The Bill details the equitable share of revenue for each county government. The total sum of KSh 428,000,000,000 comprises:
- A baseline allocation of KSh 387,425,000,000 derived from the FY 2024/25 allocation.
- An affirmative action allocation of KSh 4,460,000,000, ring-fenced to grant KSh 371,666,667 to each of 12 selected counties not favored by other parameters.
- An additional equitable share of KSh 36,115,000,000 divided based on a formula indexing population (45%), equal share (35%), poverty (12%), and geographic size (8%).
Mandatory Budget Ceilings on Recurrent Expenses
The Second Schedule places strict limits on what counties can spend on recurrent operations in FY 2026/2027:
- County Assemblies: Collectively limited to KSh 40,210,588,835.
- County Executives: Collectively limited to KSh 25,250,626,877.
Strict Oversight on Transferred Functions
Clause 6 outlines requirements for devolved county functions transferred to the National Government under Article 187 of the Constitution:
- County assemblies must appropriate funding not less than the amount allocated in the preceding financial year.
- The receiving national government entity must submit quarterly performance reports to the Senate and respective county assemblies.
- The Auditor-General must publish a special audit report on the performance of these transferred entities within three months after the end of the financial year.
Monthly Reporting and Accountability Mandates
To track and secure funds:
- The Cabinet Secretary for finance must publish a monthly report on all actual revenue transfers made to county governments.
- County treasuries must report and reflect all National Government transfers separately in their quarterly and annual financial statements.
- Persistent failure to comply with the Bill's provisions constitutes financial misconduct under the Public Finance Management Act (Cap. 412A).
Bill No.
Bill No. 10 of 2026
Gazette No.
Supplement No. 107 of 2026
Background
The County Allocation of Revenue Bill, 2026 is a legislative requirement under Article 218(1)(b) of the Constitution of Kenya. It defines the framework for sharing revenue raised nationally among the 47 county governments for the 2026/2027 financial year. The allocations are calculated based on the fourth determination of the revenue-sharing formula approved by Parliament under Article 217(7) of the Constitution.
Key Amendments
While this Bill acts as an annual allocation framework rather than an amendment to permanent acts, it sets out critical fiscal distributions for FY 2026/2027:
- Revenue Distribution Formula: Implements a revised distribution formula for the additional KSh 36.115 billion above the baseline. The index allocates funding based on population (45%), equal share (35%), poverty levels (12%), and geographical size (8%).
- Affirmative Action: Ring-fences KSh 4.46 billion to provide KSh 371.7 million each to 12 disadvantaged counties.
New Obligations
- Reporting by the Cabinet Secretary: The Cabinet Secretary for finance is required to publish monthly details of actual cash transfers to each of the 47 county governments.
- Accounting Requirements for County Treasuries: Each county treasury must report all allocations from the national government in its books of accounts. These figures must be presented separately from other revenues in consolidated quarterly and annual reports submitted to the Public Sector Accounting Standards Board (or the National Treasury in its absence).
- Transferred Functions Governance: For any devolved function transferred to the National Government, the respective county executive and national government must mutually determine costs. The county assembly is required to appropriate funds for these functions at levels at least matching the previous fiscal year.
Penalties
- Financial Misconduct: Clause 9 dictates that any serious or persistent non-compliance with the provisions of this Act constitutes an offense of financial misconduct under the Public Finance Management Act (Cap. 412A).
Transitional Provisions
- Payment Schedules: Transfers must be executed in accordance with a payment schedule approved by the Senate and published in the Kenya Gazette by the Cabinet Secretary, as required by Section 17 of the Public Finance Management Act.
Gazettement
The County Allocation of Revenue Bill, 2026, sponsored by the Chairperson of the Standing Committee on Finance and Budget, was published in the Kenya Gazette No. 107 and was scheduled to mature on 13 May 2026.
Gazettement
The County Allocation of Revenue Bill, 2026, sponsored by the Chairperson of the Standing Committee on Finance and Budget, was published in the Kenya Gazette No. 107 and was scheduled to mature on 13 May 2026.
Bi-cameral Consideration
A message from the Senate regarding the passage of the Bill was conveyed to the National Assembly.
First Reading
The Bill was read a First Time in the National Assembly.
Second Reading
The Bill was read a Second Time in the National Assembly.
Committee of the Whole House
The Bill was considered in the Committee of the Whole House.
Third Reading
The Bill was passed with Third Reading in the National Assembly and referred back to the Senate without amendments.
Presidential Assent
The Bill was assented to by the President.