Reward greediest counties? Anger public with hard facts

Monday July 13 2015


By Jason Lakin

As predicted, Kenyans are going back to court. In March, I wrote in this space about the legal decision that overturned the budget ceilings on county allocations for the executive and assembly.

To recall, after a season of seemingly irresponsible budgeting by county assemblies countrywide, the Commission on Revenue Allocation (CRA) provided guidance to counties on the maximum amount they could budget for running costs of the two branches of county government.

These suggestions were then converted into hard rules by the Controller of Budget (CoB), which refused to condone budgets that did not respect the ceilings.

The county speakers went to court protesting that CRA recommendations could not be treated as binding by the CoB. They actually won their case: CRA recommendations were found to be non-binding, and the CoB was found to have exceeded its mandate in trying to impose ceilings on counties.

Yet the case did not actually result in the end of the ceilings. Indeed, CRA has reintroduced ceilings this year, and the latest brouhaha is with the Senate, which has now raised the ceilings for the assemblies beyond what CRA proposed.  This has prompted the governors to threaten court action. 

Why is this happening?  While the court case was broadly about the ceilings, it was specifically aimed at the CRA and CoB. I assume that the speakers believed, as I did, that these were the institutions that had set the ceilings and were therefore the ones to be brought to court. 

Yet in his ruling, at the same time that he dismissed the role of CRA and CoB, the judge suggested that it was really Parliament that had set the ceilings last year through the County Allocation of Revenue Act. (This is the act that determines how much each county receives in national transfers every year.)  

The judge argued that since the matter of Parliament’s role had not been brought before him, he would not rule on whether it was constitutional or not. 

This curious interpretation of events gave credence to a possible role for Parliament in setting ceilings.  It implied that if the CRA recommendations were adopted by Parliament, this could potentially be a legitimate mechanism for controlling counties.  Whether it was or not would require another court case to decide.

But as far as I know, Parliament did not set any ceilings in last year’s revenue sharing process. In a sense, the court has indirectly encouraged them to do so. 

Indeed, CRA’s immediate response to the ruling was to promise to deliver their ceilings to the Senate in time to be included in the County Allocation of Revenue Act this year to ensure that they were legitimised. 

It is now the disagreement between the Senate and the CRA on those ceilings that has the governors up in arms.  The governors in turn are victims of their own strategy last year; had they rejected the concept of ceilings in the first place, and the notion that national institutions could set them, they would not now find themselves in this dilemma. 

They opted rather to use the ceilings last year to wage their own wars against the assemblies, thereby legitimating this spectacle of national institutions setting ceilings for county spending.

Unfortunately, the big loser in all of this is ultimately the devolved system. While we cannot simply sit back and let county assemblies fritter away public money on trivial expenditures, we must find a constitutional way to control them. 

This entire debate has become one of shifting control between different national bodies, none of whom have this mandate.  Moreover, the process by which these ceilings are set appears completely arbitrary. 

The Senate recently stated that they had lifted the ceilings for counties that requested it and not for the others. Is the argument that the greediest assemblies are the ones that should be rewarded?

The lack of transparency in estimating county costs means that these ceilings lack democratic legitimacy, and hardly serve as a weapon of protecting the public from rapacious assemblies.

What is the alternative? Let the National Treasury, CRA or Senate provide a rigorous assessment of county running costs. Let them publicise a league table showing the costs across counties and exposing the assemblies (and executives) that are spending above their recommendations and the average. 

Let them ruthlessly challenge these bodies through the media. Let public anger gather around hard facts.  Let the national government consider conditional grants that reward counties with development funds for reducing their running costs over time. The popularity of these funds and the failure of spendthrift counties to access them would put pressure on those counties to reform.

This is how public policy must work in a democratic and devolved system: we must empower the prudential through information and carrots.  The time for sticks only approach from the centre has passed. 

Jason Lakin is the Kenya country director for the International Budget Partnership. E-mail: [email protected]