The Commission on Revenue allocation, CRA, has undertaken extensive technical consultations which have resulted in a proposed Third Basis for Equitable Sharing of Revenues among county governments. The CRA is now seeking public views on the proposed third basis before tabling it in Parliament for consideration.

The proposed Third Basis has four main objectives that the CRA seeks to achieve with the horizontal allocation of funds. The first broad objective is to enhance service delivery, the second is to promote balanced economic growth. The third and fourth objectives are to promote County fiscal performance and reward counties for optimizing revenue collection, and the prudent management of financial resources, respectively.

To achieve these objectives CRA proposes some changes from the Second Basis for revenue sharing. These changes are motivated by: first the need to strengthen the link between the constitutional mandates of the counties, and the intergovernmental fiscal transfer system i.e. finance should follow function.

Second is the need to closely match funding to expenditure need. In this regard the proposed third basis identifies the most appropriate unbiased measures of expenditure needs and provides indicative resource allocations for each function. The proposed changes in the relative weights of each of the expenditure measures reflect the cost of the different functions of county governments.

The proposed approach provides a clear and transparent funding norm for different county functions and services. This year the equitable share to county governments is Kshs. 314 billion. The CRA recommends that the equitable share to county governments be increased to Kshs. 336 billion for the year 2019/20 to enhance the delivery of devolved services.

Although the proposed basis is not a budgeting framework, it provides a mechanism through which citizens can hold county governments responsible for the provision of county services and should help strengthen accountability and value-for-money at the county level.

The CRA welcomes written submissions on the proposed third basis.