Article 224 of the constitution states, ‘each devolved units shall prepare and adopt its own annual budget and the appropriation bill in the form and according to the procedure prescribed by an act of parliament.’
The Public Finance Management Act and its corresponding Regulation, describes in detail, the steps of the budget-making process, which is expected to be both inclusive and consultative.
The County Budget making process begins each August, when the County Executive Committee Member in charge of Finance – the CECM (Finance), releases the Budget Circular before the 30th of each August to all the county departments, entities and other partners in development that serve to;
1. Give the guidelines and sets in motion formal budget process while giving the necessary timelines for the process. The circular also gives the format of the budget documents and the procedure to be followed during public participation
2. Highlight the key policy areas and issues to be considered in preparing the budget, the circular further instructs county departments and other county entities to provide their top service priorities within the medium term framework and their link to national priorities. Departments are expected to submit their own expenditure estimates of providing goods and services in order of priority.
The law requires that planning shall form the basis of any county spending. To this regard, by the 1st of every September, the County Government is Expected to have prepared the County Integrated Development Plan (CIDP), and the Annual Development Plan (ADP).
CIDP is a five-year master plan that will help the county realise service and infrastructural targets for the benefits of the residents. This is the single reference point for the coordination of all county sectors. The CIDP is also a reference point of any third party partnership that wishes to engage in any socio-economic activity benefiting the residents of the county.
Each year, the CIDP is sliced at about a fifth of the expectation that forms the basis of the ADP. The plan, just like the CIDP, is subjected to public participation and after adoption by the county executive committee members (the county cabinet), is forwarded to the County Assembly for approval.
To give a clear guide on the past performance and highlight the outlook for revenue and expenditure projections, by the 30th of every September, the CECM (Finance) submits the County Budget Review and Outlook Paper – CBROP to the County Executive Committee (County Cabinet) for approval and subsequently forwards to the County Assembly by the 21st of every October for adoption.
CBROP majorly provides both a backward and forward view of the previous budget and gives a review of the previous year’s fiscal performance of the budget and how it impacts on the financial objectives and fiscal responsibilities principles. This helps provide basis for revision and broad assumptions behind the preparation of the next budget.
After the National Treasury releases the National Policy Statement by the 15th of every January, the County Government then uses the statement to align the County and National Government’s medium term priorities and objectives.
This is then included in the County Medium Term paper called the County Fiscal Strategy Paper (CFSP), that gives a three-year comprehensive overview of how the county intends to raise and spend funds over the next financial year within the medium term expenditure framework.
The CFSP most importantly, gives the ceiling of allocations of funds to various departments as per the development strategy and priority of the county.
Alongside the CFSP, the county is also expected to prepare the Debt Management Strategy Paper (DMSP) and submit alongside the CFSP at all stages. The DMSP is a medium term plan that shows how the county intends to finance its budget through borrowing and gives the terms and obligations of any borrowed funds or intentions to borrow.
These Paper are subjected to public participation for concurrence by the residents while indicating the intended priorities over the medium term.
The law requires that the County Treasury to prepare and submit to the County Executive Committee the CFSP and DMSP for approval and subsequently, the CECM (Finance), to submit the approved the Paper to the county assembly, by the 28th February of each year.
The County Assembly is expected to approve the CFSP alongside the DMSP within 14 days with or without amendments. If the County Assembly will not have discussed and approved the CFSP and the DMSP within the stipulated timeline, both papers are considered approved.
After allocation of the Departmental Ceilings, the County Treasury provides its leadership into the development of the annual county estimates. The annual estimated – the budget estimates, is then prepared in program-based format as required by law and thus the Program Based Budget (PBB), which should be presented to the County Assembly by the 30th of every April.
The Assembly is then expected to discuss the budget, subject the same to further public participation before approving with or without amendments by the 30th of every June. The County Treasury then prepares the Appropriation Bill – the document required by law, to the Governor’s authority to spend what is within the PBB.
The governor subsequently delegates the authority to spend the county resources to the Accounting Officer of the county – the CECM (Finance), through signing of the General Warrant document, thus beginning the implementation of the budget by the 1st of every July – the beginning of the new county financial year.
Running concurrently are the preparation of the County Procurement and Disposal Plan and the Cash Flow Projects for the year.
Paradoxically, the revenue raising measure to finance the budget for the county is expected to be done 90 days after the approval of the Appropriation Bill, though the enactment of the County Finance Bill by the 30th of September.
County Budget is basically the estimate of the county expected annual resources and the corresponding expenditures. The resources entail the equitable share – the money allocated annually from the National Government, the County own generated revenue, grants and conditional and non-conditional allocations from the National Government, while the expenditures are majorly the programs and projects costs of the year add county operational and emolument costs.