Governors Lose Seven-Year Legal Fight to Prevent Treasury Delays

The High Court has rejected a nearly seven-year-old attempt by the Council of Governors to force the National Treasury to release counties' share of national revenue by a fixed date each month, ruling that the dispute should first have gone through the country's intergovernmental dispute-resolution system.

• The decision does not clear the Treasury of wrongdoing over delayed county funding but the court did not decide whether withholding or delaying counties' money was lawful. 
• Justice Roselyne Aburili found that the Council had gone to court without first exhausting the procedures created to settle disputes between national and county governments.
• However, the court has affirmed the Council of Governors' legal capacity to sue for constitutional issues connected to its functions.

“My analysis of this fact is that there is no justification for moving the Court at this time to seek constitutional redress for matters that could have been well ventilated before a different forum established by law,” Justice Aburili ruled.

The case began in December 2019, when governors sued the National Treasury, the Controller of Budget, and the Attorney General over what it described as persistent delays in transferring counties' constitutionally guaranteed revenue.

The Council had asked the court to require the Treasury to release counties' equitable share by the 15th day of every month. It also wanted the court to order the immediate release of money that was already overdue and to prevent the Treasury from withholding more than half of a county's allocation even where the county had seriously failed to meet its obligations.

The Cost of Delays

By June 2022, the Council said that only 25 of the 47 counties had received their April allocation. Only one county had received its May allocation. Counties also accused the Treasury of making releases conditional on the settlement of debts including unpaid electricity bills and pension obligations.

For counties, delayed transfers mean delayed salaries, stalled projects, and an inability to plan spending with any confidence. For the Treasury, the timing and mechanics of transferring billions of shillings across two levels of government involve a complicated fiscal system that the courts have previously been reluctant to micromanage.