Negotiations between the National Assembly and the Senate over the Division of Revenue Bill, 2026 stalled on Monday after the two Houses could not agree on the final allocation to county governments, extending uncertainty over the sharing of national revenue.
The Mediation Committee, co-chaired by Alego Usonga MP Samuel Atandi and Mandera Senator Ali Roba, suspended the talks and pushed the next sitting to Wednesday at 1pm to allow further internal consultations after positions remained apart.
At the centre of the disagreement was the amount to be allocated to counties, with the National Assembly settling at Sh425 billion after revising its earlier position of Sh420 billion, while the Senate maintained its stand at Sh440 billion.
The Senate had earlier reduced its demand from Sh454.7 billion to Sh443 billion and later to Sh440 billion in an effort to narrow differences, but the gap with the National Assembly remained unresolved.
The Division of Revenue Bill outlines how national revenue collected in the 2026/27 financial year beginning July 1, 2026 will be shared between the national government and county governments. The delay now raises pressure on timely completion of the budget process.
Atandi said the National Assembly had already reached its limit due to revenue constraints.
“We have hit a dead end. We have no more room to increase allocations to counties. We have no more fiscal space,” he said before the adjournment.
He later said the Budget and Appropriations Committee had identified only limited adjustments that could slightly raise the county offer through internal savings.
“We can only raise Sh3 billion, bringing the allocation to Sh423 billion. After further consultation, we can add another Sh1 billion to reach Sh424 billion,” he said.
The House eventually settled on Sh425 billion as its final position.
On the Senate side, Ali Roba said senators had already made considerable concessions and insisted that counties could not operate effectively under lower figures.
He said the Senate had agreed on Sh440 billion after consultations with members and county stakeholders, including the Council of Governors, ahead of further engagement.
Earlier, Mombasa Senator Mohammed Faki had urged both sides to reduce their positions further to unlock agreement.
“If the National Assembly is climbing by a mere Sh3 billion, we should also climb down by a similar amount until we meet somewhere,” he said.
The stalemate followed earlier approval by the National Assembly of a Bill pegging county allocations at Sh420 billion, which the Senate later increased to Sh454.7 billion, triggering mediation.
The Commission on Revenue Allocation had recommended Sh459 billion for counties in the 2026/27 financial year, widening the difference between technical advice and political agreement.
Some senators accused the National Assembly of relying on outdated financial records, arguing that this had affected the revenue base used in determining county shares.
Narok Senator Ledama Ole Kina said delayed approval of recent audited accounts had distorted the calculation of county allocations.
“You are using audited and approved national government revenue reports for the 2021/22 financial year. You are late by two years despite the Auditor-General having tabled accounts for 2023/24 and 2024/25. Had you approved the latest audited accounts, the allocation to county governments would be higher than Sh450 billion,” he said.
The Constitution requires that counties receive at least 15 per cent of national revenue based on the latest audited and approved accounts.
The National Assembly maintains that current fiscal pressure limits any increase beyond Sh425 billion, while the Senate argues that at least Sh440 billion is needed to meet county obligations, including pending bills, Salaries and Remuneration Commission awards, and funding for Community Health Promoters.
Senators also pointed to ongoing programmes such as County Aggregation and Industrial Parks, the Financing Locally-Led Climate Action Programme, the Food Systems Resilience Project, and the National Agricultural Value Chain Development Project as key spending priorities.
Ali Roba said the Senate position was anchored on consultations and practical county needs.
“Our proposal is data-driven and informed by consultations. We must keep these realities in mind as we deliberate,” he said.
Atandi, however, warned that the country is facing a revenue shortfall estimated at about Sh200 billion despite ongoing efforts to improve revenue collection.
The National Treasury and the Budget and Appropriations Committee have proposed a Sh4.8 trillion national budget for the 2026/27 financial year, with Sh1.1 trillion expected to come from borrowing, adding pressure to the ongoing negotiations.