A deadlock between the National Assembly and the Senate over the equitable distribution of revenue to devolved units is set to be resolved through mediation.

The two houses have issued conflicting decisions on the matter, with the National Assembly approving a Sh380 billion allocation to counties as proposed by the National Treasury, while the Senate has unanimously opposed this reduction.

The Senate has maintained that any decrease in revenue shared with counties will negatively impact devolution.

The standoff threatens to delay the passage of the revised Division of Revenue Bill 2024, which determines the allocation of funds between the national and county governments.

President William Ruto had previously declined to sign the Allocation of Revenue Bill (CARA) 2024, instead returning it to the Senate for reconsideration.

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In a Presidential Memorandum, he called for a reduction in the shareable revenue to counties from Sh400.1 billion to Sh380 billion.

However, Senators have vehemently opposed the Sh20 billion cut, highlighting that essential programs tied to non-discretionary expenditures, totalling Sh39.9 billion, will be severely affected.

These programs include the housing levy, county health worker employment, the leasing of medical equipment, and National Social Security Fund deductions.

Senators are instead advocating for the withdrawal of the National Government Constituency Development Fund (NG-CDF), arguing that it is unconstitutional and that the funds should be directed to counties.

They believe that this would bridge the gap created by the proposed reduction in county allocations.

The National Assembly had initially allocated Sh68 billion to the NG-CDF for this financial year, but this amount was revised downward to Sh61.2 billion following the withdrawal of the Finance Bill.

The High Court has already declared the NG-CDF Act 2015 unconstitutional, citing a violation of the principle of separation of powers.

MPs have vowed to appeal the court's decision and seek a stay order pending the outcome of the appeal. The current impasse is not unprecedented, as similar incidents occurred in 2017 and 2020.

The Speakers of both houses will now refer the matter to a mediation committee comprising members from both the National Assembly and the Senate.

The committee will strive to reach a compromise that will allow for the passage of the Division of Revenue Bill and ensure the timely disbursement of funds to counties.