A fresh round of negotiations has kicked off in Parliament as lawmakers attempt to settle a heated disagreement over how much money counties should receive in the next financial year, with the outcome now hanging on a mediation process meant to bridge the widening gap between the two Houses.
The Mediation Committee, co-chaired by Alego Usonga MP Samuel Atandi and Mandera Senator Ali Roba, has started deliberations on the Division of Revenue Bill, 2026, after the National Assembly and the Senate failed to agree on the final figures for sharing national revenue.
At the centre of the standoff is the amount set aside for counties. The National Assembly settled on Sh420 billion, while the Senate pushed the figure upward to Sh454.7 billion, arguing that devolved governments are under increasing financial strain linked to new obligations and outstanding bills.
Co-Chair Senator Ali Roba defended the Senate’s position, saying the proposal was anchored on consultations and data.
"Our proposal is data-driven and informed by consultations. We must keep these realities in mind as we deliberate," he added.
He explained that counties are expected to meet costs tied to Salaries and Remuneration Commission advisories and co-fund major programmes such as County Aggregation and Industrial Parks (CAIPs), Community Health Promoters (CHPs), the Financing Locally-Led Climate Action Programme (FLLoCA), the Food Systems Resilience Project (FSRP), and the National Agricultural Value Chain Development Project (NAVCDP).
On the other side, Budget and Appropriations Committee Chair, Alego-Usonga MP Samuel Atandi said while there is support for strengthening devolution, the current fiscal environment cannot accommodate higher allocations without strain.
"We were in agreement that we should one day achieve Sh450 billion allocation for counties. But the current realities of our fiscal environment have changed," Atandi said.
He pointed to a revenue gap of about Sh200 billion despite ongoing efforts to improve collections, warning that spending decisions must reflect the country’s economic position.
"I am a strong proponent of increased allocations to counties, but we must also appreciate the realities, including global economic challenges. We want the government to succeed and the country to move forward," he stated.
Narok Senator Ledama Olekina said counties are already under pressure, citing delayed payments and strained service delivery.
"The situation is dire. Counties have many pending bills and service delivery has been disrupted. Counties are asking for the constitutional minimum to help them settle pending bills and meet operational costs," he said.
MPs in the National Assembly maintained that while devolution must be funded, the available resources demand caution.
Kibwezi West MP Mwengi Mutuse said lawmakers are aligned on supporting counties but differ on timing and affordability.
"All of us are speaking the same language. We support devolution and devolution must be funded. At one time we will get to the Sh450 billion mark, but we may not get there today," he said.
He also raised concern over the national budget deficit, noting that the government is already operating under heavy borrowing pressure.
"We must face the country honestly and make responsible decisions that safeguard fiscal sustainability," he added.
Senator Tabitha Mutinda said the Senate remains firm in defending county interests and ensuring funds follow devolved functions.
"The Senate has to defend counties. We need to look at areas where resources can be rationalised, particularly where services are already devolved," she said.
Endebess MP Robert Pukose urged a closer look at alternative funding streams already supporting counties, especially in the health sector.
He said the Primary Healthcare Fund could ease pressure if implemented effectively at county level.
"If the Primary Healthcare Fund works effectively, significant resources will flow directly to counties,' Pukose said.
Hon. Japheth Nyakundi added that while support for counties is strong, financial constraints cannot be ignored.
"We really want to support and give more money to counties. The reality, however, is that resources are limited. We must work together to find sustainable solutions," he said.
The Division of Revenue Bill, 2026 sets out how nationally raised revenue will be shared between the national and county governments for the 2026/27 financial year. The mediation committee is now tasked with finding a middle ground after the two Houses failed to agree on amendments to the Bill.
Talks are expected to continue next week as lawmakers attempt to arrive at a single formula acceptable to both sides.