THE COUNTY ALLOCATION OF REVENUE BILL, 2023
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KSh 385.4 Billion Allocated to Counties for FY 2023/2024
Clause 4 and the First Schedule allocate a total of KSh 385,424,616,067 as the equitable share of revenue raised nationally among county governments. This allocation is divided into:
- KSh 158,250,000,000 (representing half of the FY 2019/20 allocation of KSh 316.5 billion).
- KSh 227,174,616,067, which is the remaining balance distributed according to the third revenue-sharing formula.
Mandatory Budget Ceilings Placed on Recurrent Expenditures
Clause 5 and the Second Schedule place strict ceilings on the recurrent budgets of county governments:
- County Assembly Recurrent Ceilings are capped at a national total of KSh 40,612,656,492.
- County Executive Recurrent Ceilings are capped at a national total of KSh 25,825,556,396.
Oversight and Audits Imposed on Transferred County Functions
Clause 6 regulates the transfer of county functions to the National Government under Article 187 of the Constitution:
- National Government entities managing transferred functions must submit quarterly reports to the Senate and respective county assemblies.
- The Auditor-General is required to prepare and submit a special audit report on the financial and non-financial performance of the transferred entity within three months after the end of each financial year.
Strict Financial Disclosure Rules for County Treasuries
Clause 8 introduces strict reporting and accounting rules:
- County Treasuries must separately reflect the total equitable share in their books of accounts and revenue estimates.
- County Treasuries must report actual transfers received in their quarterly and annual reports to the National Treasury and the Public Sector Accounting Standards Board.
Bill No.
Bill No. 16 of 2023
Gazette No.
Supplement No. 52 of 2023
Background
The County Allocation of Revenue Bill, 2023 is introduced pursuant to Article 218(1)(b) of the Constitution of Kenya to provide for the equitable allocation of revenue raised nationally among the county governments for the 2023/2024 financial year. The sharing is based on the third determination of the revenue-sharing formula approved by Parliament in accordance with Article 217 of the Constitution.
Key Amendments
While the Bill does not amend existing principal Acts, it sets out the actual fiscal allocations for the 2023/2024 financial year on the basis of the following allocation criteria:
- Basic Share Index: 20%
- Population Index: 18%
- Health Index: 17%
- Poverty Index: 14%
- Agriculture Index: 10%
- Land Area Index: 8%
- Roads Index: 8%
- Urban Index: 5%
New Obligations
Transfer and Reporting Obligations
- Payment Schedules: County allocations must be transferred to the respective County Revenue Funds in accordance with a payment schedule approved by the Senate and published in the Kenya Gazette by the Cabinet Secretary for Finance (Clause 4(2)).
- Monthly Reports: The Cabinet Secretary for Finance is required to publish a monthly report on all actual revenue transfers made to county governments (Clause 7).
- County Accounting Obligations: Each County Treasury must ensure estimates of revenue separately reflect the total equitable share under Section 4. They must also report actual transfers received in quarterly and annual consolidated reports under the Public Finance Management Act (No. 18 of 2012).
Transferred Functions
- County Assembly Appropriations: Where functions are transferred to the National Government, county assemblies must appropriate funds for those functions at a level not less than the amount appropriated in the preceding financial year (Clause 6(2)).
- Quarterly Reporting: The National Government entity overseeing the transferred devolved function must submit quarterly reports on the status of the devolved function to both the Senate and the respective county assembly (Clause 6(4)).
- Auditor-General Audits: The Auditor-General must audit the financial and non-financial performance of the transferred entity and submit a report to the Senate and county assembly within three months after the end of the financial year (Clause 6(5)-(6)).
Penalties
- Financial Misconduct: Under Clause 9, any serious or persistent non-compliance with the provisions of this Act constitutes a financial offence punishable under the Public Finance Management Act (No. 18 of 2012).
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