County governments are set to receive Sh428 billion in the next financial year after lawmakers struck a deal that ended a fierce dispute over how nationally collected revenue should be shared, clearing a major hurdle just weeks before the start of the new budget cycle.
The breakthrough was reached on Tuesday by the Mediation Committee tasked with resolving differences between the National Assembly and the Senate on the Division of Revenue Bill, 2026.
The agreement came after several rounds of discussions involving the National Treasury and prevented a prolonged stalemate that had threatened to delay the flow of funds to devolved units.
The committee's co-chairperson and National Assembly Budget and Appropriations Committee chairperson Samuel Atandi announced that both sides had settled on Sh428 billion as the amount to be allocated to counties.
“This is the very best we can offer. Even if we adjourned, nothing much would change,” said Atandi.
“From the National Assembly’s perspective, we have no further additions to make other than the Sh428 billion.
We have justified our figures, and we cannot increase fiscal space any further. I urge you to accept the money, shake hands, and sign off the Mediated Version of the Division of Revenue Bill 2026.”
The settlement required senators on the mediation team to scale down their earlier proposal of Sh440 billion. The National Assembly had maintained that available resources could not support the higher figure, leading to lengthy negotiations between the two sides.
The agreed allocation is Sh13 billion higher than the Sh415 billion counties received in the current financial year. It is also above the Sh420 billion that had been proposed by the National Treasury for the 2026/27 budget period.
The compromise followed a deadlock on Monday when members of the committee failed to agree on the amount of equitable share to be transferred to county governments.
While senators pushed for a larger allocation, members of the National Assembly argued that the country's fiscal position could not accommodate the additional demands without affecting other government obligations.
During the negotiations, Atandi first offered an increase of Sh1 billion before later returning with a revised proposal following consultations with Treasury officials and experts from the Parliamentary Budget Office.
Samburu West MP Lesuda Naisula said the consultations helped secure additional resources for counties.
“After consultations, we have managed to secure an additional Sh2 billion, bringing the total shareable revenue to counties to Sh428 billion,” said Lesuda Naisula.
Atandi explained that the extra funds would come from adjustments within recurrent expenditure and not from development spending.
“We did not touch the development vote because there are critical ongoing projects that must be funded,” he said.
He maintained that the latest proposal represented the limit of what could be accommodated within the budget framework.
“This is the best we can do. If the Senate cannot accept this, then I’ll be glad for the mediation process to collapse. I would be very happy for this process to stall. I plead with senators to accept this offer as the final best allocation.”
Atandi further stated that he would support salary reductions for senators if that was the only way to meet demands for more resources for county governments.
As efforts to find common ground continued, Samburu Senator Steve Lelegwe proposed lowering the Senate's position and appealed for flexibility from the National Assembly.
“Is there any chance that the National Assembly can meet with us?” asked Ali Roba, the co-chairperson of the Mediation Committee.
“Political mediation is getting the best possible outcome out of the least favourable outcome. The best possible outcome from the least favourable outcome. Our colleagues have proven that, in this case, it is like milking a stone. We could not achieve the ideal outcome, but we have made progress.”
Narok Senator Ladema Ole Kina also appealed for a middle-ground solution, saying the remaining gap between the two positions was manageable.
“I am ready to take a pay cut if we get Sh4 billion for the counties,” said Ole Kina.
“It’s true that mediation is about achieving a compromise.
But I find it difficult to agree, as our role is to protect the interests of the counties.”
The dispute stemmed from differing positions adopted by the two Houses during consideration of the Division of Revenue Bill, which determines how revenue collected by the national government is shared between the two levels of government.
The National Assembly passed the Bill with an allocation of Sh420 billion for county governments for the financial year beginning July 1, 2026.
The Senate later amended the proposal and raised the allocation to Sh454.7 billion, triggering the formation of a mediation committee as required by parliamentary procedures.
The Commission on Revenue Allocation had recommended that county governments receive Sh459 billion in the coming financial year.
Under constitutional provisions, counties are entitled to not less than 15 per cent of nationally raised revenue based on the latest audited accounts approved by the National Assembly.