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Counties’ wage bill alarms budget boss

Dinah Ondari @dinaondari

The Controller of Budget has raised alarm over ballooning wage bill in counties. Agnes Odhiambo says in her latest report that high expenditure on salaries and allowances has denied counties crucial resources to implement development projects.

“The current trend is unsustainable, with some counties pumping as much as 60 per cent of their expenditure towards personnel emoluments,” she warns. According to the report, in the first quarter of the current financial year 2017/18, counties spent as much as 78 per cent of their money to pay their employees.

“This amount equals 50 per cent of total funds available to counties,” it says. County governments incurred an aggregate of Sh27.75 billion on personnel emoluments (PE) in the first quarter of the year under review, which accounted for 78.3 per cent of the total expenditure for the period and 50 per cent of the total funds available to them.

Although this expenditure is a decrease of 6.3 per cent from Sh29.6 billion incurred in the same period in 2016/17, it remains high, when compared with the set ceiling on the county governments’ expenditure on wages at 35 per cent of the total revenue. “This will therefore limit implementation of other county programmes if not addressed,” says the report.

This means that the country’s 47 counties are still pouring money into employees pockets and are underperforming in terms of development projects implementation. The report recommends that county governments should contain the wage bill at sustainable levels and in compliance with Regulation 25 (1) (b) of the Public Finance Management (County governments) Regulations, 2015.”

And although the latest report only covers the first quarter of the current financial year, a period in which some counties are yet to report any expenditure, it paints a worrying trend.

An annual report by the same office, released recently shows that the devolved units spent an aggregate of Sh130 billion in personnel emoluments in the 2016/17 financial year, which accounted for 41 per cent of the total expenditure for the period, an increase of 10 .4 per cent from Sh118 billion in the 2015/16 financial year.

“A total of 34 counties reported expenditure on personnel emoluments that exceeded 35 per cent of their total expenditure ,” the report says, adding: “The high wage bill is unsustainable and will negatively affect spending on development activities.”

Odhiambo has now tasked the county public service boards to ensure the wage bill does not exceed 35 per cent ceiling. County treasuries have also been put on the spot for failing to develop and implement strategies to mobilise local collection of revenue. The statistics in the 2016/17 financial year report mean only a few counties complied with the prescribed ceiling.

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