The Council of Governors (CoG) has warned that rising public debt and shrinking county allocations threaten devolved governance.
In talks with the Senate Finance Committee on Thursday, governors pushed for increased equitable share funding, inclusion of UHC transition costs, and urgent steps to restore debt sustainability ahead of the 2026/27 financial year.
According to the Council, discussions focused on the fiscal framework underpinning the upcoming financial year and the broader trajectory of public debt.
“The Council raised concern over the continued breach of the 55 per cent debt anchor and the growing cost of debt servicing, which now consumes 53 per cent of ordinary revenue, compared to Counties’ 14 per cent, despite Counties not contributing directly to the public debt stock,” the statement said.
The governors argued that the expanding cost of servicing national debt has significant implications for resource allocation, particularly at the devolved level.
They noted that counties, which are constitutionally mandated to deliver key public services, do not directly contribute to the accumulation of public debt yet face constraints as debt servicing claims an increasing share of revenue.
The Council also highlighted a worrying fiscal trend affecting devolution. “The Council also highlighted the declining trend of County transfers as a share of GDP, warning that this threatens the stability, predictability and sustainability of devolved governance,” the statement read.
Governors said that reduced transfers relative to the size of the economy could disrupt planning and service delivery across the country’s 47 counties.
They warned that uncertainty in funding levels undermines the core principles of devolution, including equitable access to services and local accountability.
To address these concerns, the Council tabled a series of proposals aimed at protecting county operations in the 2026/27 financial year.
“To safeguard service delivery across the 47 Counties, the Council proposed an equitable share allocation of Sh534.96 billion for FY 2026/27,” it said.
In addition, the governors called for the inclusion of UHC workers’ transition costs within the Division of Revenue,” arguing that these costs should be factored into national allocations to avoid overburdening county budgets.
They further proposed the transfer of Sh65.97 billion tied to delineated devolved functions, stressing that funds linked to specific devolved responsibilities should be promptly and fully transferred to county governments.
The Council also urged urgent measures to restore debt sustainability, signalling that broader fiscal reforms are necessary to stabilise public finances and protect funding for essential services.
At the heart of the governors’ position is a call for reliable and adequate financing of devolution. “Sustainable devolution depends on adequate, predictable and timely resourcing,” the Council stated.
The consultative meeting comes at a critical stage in the budget cycle, as Parliament considers fiscal policy directions for the coming financial year.
The governors’ intervention reaffirms growing tension over how national revenue is shared and the impact of debt servicing on devolved units.
As deliberations on the 2026 BPS and MTDS continue, the balance between debt obligations and funding for counties is likely to remain central to discussions on Kenya’s fiscal future.
