High Court Judge John Onyiego on Tuesday, July 11, suspended the distribution of the Equalisation Fund. This decision comes as a result of an ongoing dispute regarding the revenue-sharing criteria for the financial year 2022-23.
The law had appropriated around Ksh10.3 billion which was supposed to be distributed to the 47 counties, and be used to cater for basic services including water, roads and electricity bills.
Justice Onyiego's ruling left the already cash strapped counties in limbo since the money was also supposed to be used to take care of health services in marginalised areas.
The Council of Governors challenged the revenue-sharing formula that was adopted by the National Assembly in March 2023. The formula would see the share of counties with lower revenue bases reduced.
In its petition, the Council of Governors argued that the new formula is unfair and would disadvantage counties that are already struggling to provide basic services to their residents.
The Governors sought an injunction to prevent the distribution of the Equalisation Fund until the case is heard and determined by the High Court.
Judge Onyiego noted that his order was a temporary measure, but it could have a significant impact on the distribution of resources to counties. As such, he asked the respondents to file their responses promptly.
The judge also stated that the Equalisation Fund is a vital source of funding for counties with lower revenue bases, and its suspension could mean that these counties will have to make difficult decisions about how to provide essential services.
Onyiego promised to expedite the case in order to resolve the pending issues according to the applicable laws and the constitution.
President William Ruto on Friday, June 30, signed into law the County Allocation Revenue Bill, 2023 and the Equalisation Fund Appropriation Bill, 2023.
The County Allocation Revenue Act allocated counties Ksh385.4 billion in shareable revenue, with Nairobi County government getting the largest share of Ksh 20.07 billion.
Ruto signed the two Bills at State House, Nairobi. The Head of State was flanked by Deputy President Rigathi Gachagua, and Prime Cabinet Secretary Musalia Mudavadi among other leaders.
