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Post Reply: Budget Rejections Threaten Financial Stability in 26 Kenyan Counties

<blockquote><div class="quotetitle">Quote from <a class="profile-link highlight-moderator" href="https://lawguide.co.ke/understanding-law/legal-forum/profile/lawyer/">Lawyer</a> on August 25, 2025, 7:18 am</div><div id="pl-7695"  class="panel-layout" ><div id="pg-7695-0"  class="panel-grid panel-no-style" ><div id="pgc-7695-0-0"  class="panel-grid-cell"  data-weight="1" ><div id="panel-7695-0-0-0" class="so-panel widget widget_sow-editor panel-first-child panel-last-child" data-index="0" data-style="{&quot;background_image_attachment&quot;:false,&quot;background_display&quot;:&quot;tile&quot;,&quot;background_image_size&quot;:&quot;full&quot;,&quot;background_image_opacity&quot;:&quot;100&quot;,&quot;border_thickness&quot;:&quot;1px&quot;}" ><div
			
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	<p dir="ltr" data-pm-slice="1 1 []">A looming financial crisis is gripping 26 counties in Kenya as the Controller of Budget has rejected their proposed budgets for the 2024/2025 financial year, citing significant irregularities. This development, announced recently, has sparked concerns over the potential disruption of essential services and the broader implications for devolved governance in the country.</p>
<p dir="ltr">The Controller of Budget, tasked with overseeing public financial management, flagged the budgets of these counties for failing to adhere to legal and financial guidelines. Among the issues cited were unrealistic revenue projections, non-compliance with fiscal responsibility principles, and inadequate public participation in the budgeting process. These shortcomings have raised alarms about the counties' ability to sustain critical operations, including healthcare, education, and infrastructure development.</p>
<p dir="ltr">The rejection affects a diverse group of counties, including Baringo, Bomet, Bungoma, Busia, Elgeyo Marakwet, Embu, Garissa, Homa Bay, Isiolo, Kajiado, Kakamega, Kericho, Kiambu, Kilifi, Kirinyaga, Kisii, Kisumu, Kitui, Kwale, Laikipia, Mandera, Marsabit, Meru, Migori, Nakuru, and Narok. The combined budgets of these counties, totaling billions of shillings, now face delays as they must be revised and resubmitted for approval. This process could take weeks, further straining already stretched resources.</p>
<p dir="ltr">The Controller of Budget emphasized that the irregularities identified undermine the principles of transparency and accountability enshrined in Kenya’s Constitution. For instance, some counties were found to have inflated revenue projections, which could lead to unsustainable spending plans. Others failed to demonstrate adequate public involvement, a constitutional requirement to ensure budgets reflect the needs and priorities of residents. Such lapses not only violate legal standards but also erode public trust in county governance.</p>
<p dir="ltr">The financial strain comes at a critical time, as counties are already grappling with delayed disbursements from the National Treasury. According to recent reports, the Treasury has yet to release funds for October and November 2024, exacerbating cash flow challenges. The Council of Governors has warned that without urgent action, counties may face a complete shutdown of operations by January 2025, halting essential services such as healthcare delivery and waste management. The rejected budgets add another layer of complexity, as counties cannot access funds until their revised budgets are approved.</p>
<p dir="ltr">County leaders have expressed frustration over the situation, arguing that the stringent oversight by the Controller of Budget risks stifling devolved governance. Some governors contend that the rejection of budgets, while intended to enforce fiscal discipline, could paralyze service delivery and development projects. They have called for dialogue with the National Treasury and the Controller of Budget to resolve the impasse and ensure timely access to funds.</p>
<p dir="ltr">On the other hand, fiscal experts argue that the Controller of Budget’s actions are necessary to safeguard public resources. They point out that unchecked irregularities could lead to mismanagement, corruption, or financial collapse in the affected counties. The requirement for counties to revise their budgets, though inconvenient, is seen as a critical step toward ensuring long-term financial sustainability.</p>
<p dir="ltr">The crisis has also reignited debates about the balance of power between national and county governments. The Council of Governors has criticized the National Assembly’s decision to slash counties’ equitable share by 20 billion shillings, calling it unconstitutional and a threat to devolution. This reduction, coupled with delays in fund disbursements and now the budget rejections, has fueled tensions between the two levels of government.</p>
<p dir="ltr">As counties work to address the flagged irregularities, residents are bracing for potential disruptions. In healthcare, for example, delays in funding could affect the availability of medical supplies and staff salaries, compromising patient care. Education programs, particularly early childhood development initiatives managed by counties, may also face setbacks. Infrastructure projects, such as road maintenance and water supply systems, could be stalled, further impacting local economies.</p>
<p dir="ltr">The Controller of Budget has urged the affected counties to act swiftly in revising their budgets to comply with legal standards. Counties have been advised to engage the public meaningfully, align revenue projections with realistic targets, and prioritize essential services in their revised submissions. Meanwhile, the National Treasury has committed to releasing outstanding funds once the budgetary issues are resolved, though no specific timeline has been provided.</p>
<p dir="ltr">The situation underscores the broader challenges facing Kenya’s devolved system of governance. While devolution has empowered counties to address local needs, it has also exposed gaps in financial management and accountability. As the 26 counties navigate this crisis, the outcome will likely shape public confidence in devolution and the ability of counties to deliver on their mandates.</p>
<p dir="ltr">For now, stakeholders are calling for urgent collaboration between county governments, the National Treasury, and the Controller of Budget to avert a full-blown crisis. The resolution of this issue will be critical in ensuring that essential services continue uninterrupted and that devolution remains a cornerstone of Kenya’s governance structure.</p>
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