Senate Pass Law That Will Cut Funds to Counties That Don’t Clear Pending Bills


In a move that could have significant ramifications for county governments across the nation, the Senate voted on Thursday, May 9, to pass a motion on the Status of Pending Bills with amendments, that threaten to withhold funding from counties failing to settle their pending bills promptly.

The legislation, spearheaded by Narok Senator Ledama Ole Kina, received overwhelming support, with 27 Senators voting in favour, representing a significant step towards addressing the issue of counties’ mounting debts, which stood at more than Ksh156 billion as of March.

The motion voted upon, empowers the national government to cease capitation in counties that neglect to prioritise the payment of their outstanding bills.

Senate adopted the motion with amendments from Homa Bay Senator  Moses Kajwang’s amendment, including a clause mandating counties to submit a payment plan to the Controller of Budget, with pending bills taking precedence as the first charge on the County Revenue Fund. Failure to comply would result in withheld budget releases, effectively compelling counties to address their financial obligations.

A group of governors led by Governor Waiguru addressing the media after a special sitting, April 16.

Photo

CoG

The legislation further empowers the Controller of Budget to monitor and penalise counties failing to make concerted efforts to clear their outstanding bills. Counties will now be evaluated based on their efforts to settle inherited pending bills when approving exchequer releases, as outlined in the new law.

The motion states in part, “Controller of Budget takes into consideration the efforts made by a county government to clear inherited pending bills when approving exchequer releases.”

Further adding, “County governments, in consultation with the Controller of Budget, to provide a budget for completion of all existing projects and that initiation of new projects to cease until completion of the existing projects.”

Controller of Budget Margaret Nyakang’o’s recent report exposed the magnitude of the issue, revealing that counties collectively owe suppliers and contractors over Ksh156.3 billion.

With such substantial outstanding debts, the Senate’s intervention is deemed critical in safeguarding the financial stability of county governments and ensuring the smooth delivery of services to citizens.

The urgency of addressing pending bills is necessary as the government heads to the tail end of this year’s financial year.

Last month, the Senate issued a directive for counties to clear verified pending bills of less than Ksh1 billion by the end of the current financial year, with larger debts expected to be settled by the following year.

In tandem with the Senate’s efforts to address financial accountability, another crucial bill is making strides in the National Assembly.

Majority Leader Kimani Ichung’wa’s proposed amendment to the Public Finance Management Act seeks to compel county assemblies to pass Finance Bills by June 30 each year. This deadline aims to streamline revenue collection processes and prevent revenue loss resulting from delayed passage of Finance Bills by county assemblies.

The proposed amendment responds to a longstanding loophole that has impeded revenue collection efforts in counties, with some assemblies delaying the passage of Finance Bills by several months. 

By enforcing a strict deadline, the government aims to empower counties to implement revised fee structures promptly, thereby optimising revenue generation and enhancing fiscal sustainability.

The National Treasury building in Nairobi County.

Photo

National Treasury



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