The Commission on Revenue Allocation (CRA) is proposing mass retrenchment of staff in counties to arrest the ballooning wage bill.
New CRA boss Jane Kiringai Wednesday said many counties were starved of development funds as their recurrent expenditure obligations, mainly in salaries, was not leaving them with enough funds to be channelled to development projects.
Speaking during the ongoing Legislative Summit in Mombasa, Dr Kiringai said the national government needs to come up with a package for county governments to facilitate retrenchment or voluntary retirement to cut the number of employees.
“We need to create sufficient funding for development and for this to happen, the government must consider setting up a retrenchment fund for counties. It is only by reducing the numbers that we can leave sufficient funding for development in our counties,” she said.
Deputy Controller of Budget Stephen Masha said while the Public Finance Management Regulations required that at least 30 per cent of county government revenue be used for development, few counties meet the requirement due to huge wage bills.
Mr Masha said the same regulations required that salaries and other emoluments not constitute more than 35 per cent of the revenue, yet many counties were not able to abide by this due to the high number of staff.
The CRA boss, however, said counties must find ways of increasing their local revenue collection to stop over-reliance on the government’s allocation.
“We had a case with Mombasa where the governor was candid enough to tell us that he could only give one per cent of the funds towards development because the bulk of the money was going to pay wages. If this was to continue, then devolution would not have any meaning for Kenyans,” said Kirangai.
She said that while much of county collections were from property rates, the commission had realised that the devolved units were not getting the requisite rates from the houses and land as old valuation of the properties was used, even when they had been developed.
“The focus on counties now must be enhanced collection. We do not know the potential of what every county can collect, but we are sure if there were effective ways of ensuring that there is no leakage, counties can easily sustain themselves in the same way that Addis Ababa, in neighbouring Ethiopia, does,” she said.
On his part, Masha complained of poor budget formulation by counties even as he called for the capacity building of MCAs to ensure they are equipped to handle the crucial task.
“We have to keep reviewing budget estimates that come to us from counties because they are poorly formulated. Many of them do not meet the required threshold,” he said.