The Commission on Revenue Allocation has proposed retrenchment and voluntary retirement of staff in counties to address high wage bill that has affected development projects.
A significant amount of devolved funds end up paying salaries and allowances, leaving counties with little to spend on development, according to the new boss Dr Jane Kiringai.
“We need to come up with a retirement package that allows people to go comfortably. We also need to improve on revenue collection,” she said. On Wednesday, Dr Kiringai said the national government should consider setting up retrenchment fund for counties.
She pointed out that some counties spent a paltry one per cent of their budget on development due to inherited debts, from the defunct local authorities, during their first year in office.
The commission said the national and county governments have to agree on a formula for identifying the potential of counties in revenue generation to improve local collections.
“This is not an area that can be left to county governments alone. It is a national issue,” Dr Kiringai said during the second annual legislative Summit in Mombasa organised by Senators and Members of County Assemblies.
Dr Kiringai faulted counties for failing to focus on how to improve local revenue to reduce over reliance on funds allocated from the national budget.
She cited the current property rates saying they have never been reviewed for years, to match the prevailing market rates.
“The property taxes are based on old variation rates, 20 years ago. Can we start a process of updating property values across counties,” Dr Kiringai said.
Deputy Controller of Budget, Stephen Masha said the Public Finance regulations required that at least 30 per cent of county government revenue should be channelled to development.
However, he observed that many counties were acting in breach of the regulations due to bloated staff.
Kajiado Senator Peter Mositet said the government should stop pegging allocation to counties on the last audited financial accounts. “We are currently using the 2013/14 financial accounts to allocate the funds yet we are in 2017. We end up starving counties through such wrong projections,” Mr Mositet said.
Treasury Cabinet Secretary Henry Rotich said about 10 percent of the revenue allocated to counties, more than Sh30 billion remains unused every financial year.
“It is this problem that causes the many cases of pending bills in good time,” Mr Rotich said.