Ruto signs law allocating KSh428 billion to counties after budget impasse
Act clears way for Treasury to begin county disbursements, shields devolved governments from national revenue shortfalls.
Nairobi – President William Ruto on Monday signed into law legislation allocating KSh428 billion in equitable share funding to Kenya’s 47 county governments, ending months of negotiations over revenue sharing as the government seeks to balance support for devolution with tighter fiscal controls.
The County Allocation of Revenue Act, 2026, allows the National Treasury to begin disbursing funds to counties for the 2026/27 financial year. The allocation represents 20.9% of the most recently audited nationally raised revenue for the 2021/22 financial year, exceeding the Constitution’s minimum requirement of 15%.
The final allocation followed mediation between the National Assembly and the Senate after the two houses failed to agree on the equitable share for counties amid concerns over weaker-than-expected revenue collections.
The Act also includes a revenue protection clause shielding counties from national revenue shortfalls during the financial year. Under the provision, any deficit arising from lower-than-expected national revenue collections will be absorbed by the national government rather than reducing counties’ equitable share, addressing a longstanding concern raised by governors.
Speaking after assenting to the bill at State House in Nairobi, Ruto said the allocation would strengthen devolution by giving counties the resources needed to deliver services in line with their constitutional mandates.
“The enhanced allocation will strengthen devolution by equipping county governments with the resources they need to fulfil their constitutional mandate and deliver quality services in line with their budgets and development priorities,” Ruto said in a statement.
The KSh428 billion allocation is KSh13 billion higher than the previous financial year’s equitable share and will be distributed under the revenue-sharing formula approved under Article 217 of the Constitution, which takes into account an equal share allocation, population, poverty levels and land area.
The Act also introduces new fiscal controls aimed at limiting recurrent expenditure and improving transparency in county finances. County governments and county assemblies will be required to comply with ceilings on recurrent expenditure. The National Treasury will publish monthly reports on transfers to counties, while county governments must account for all receipts in their quarterly and annual financial statements.
Counties will also be required to disclose all receipts in their quarterly and annual financial statements.
The measures seek to address longstanding concerns over delayed disbursements and weak financial reporting, which have disrupted service delivery and delayed payments to suppliers.
The allocation comes as the government continues efforts to narrow its budget deficit while managing rising public debt and slower revenue growth. The Treasury has targeted fiscal consolidation in the 2026/27 budget even as counties continue to push for a larger share of nationally collected revenue to match expanding devolved functions.
County governments rely heavily on equitable share transfers to finance frontline services including primary healthcare, agriculture, water supply, early childhood education and county roads.
The legislation ends weeks of negotiations between Parliament and the Treasury, giving counties certainty as they begin implementing their 2026/27 budgets.
