Only four counties meet legal wage bill limit as 43 exceed threshold — CRA report

Only four counties meet legal wage bill limit as 43 exceed threshold — CRA report

The report identifies Siaya, Kilifi, Tana River and Narok as the only counties that complied with the requirement under the Public Finance Management Act and county public finance regulations.

Only four county governments managed to keep their wage bills within the legally required 35 per cent of total revenue in the 2025/2026 financial year, leaving 43 others above the set limit.

A new report by the Commission on Revenue Allocation (CRA) shows that Taita Taveta recorded the highest personnel expenditure at 64 per cent of its total revenue, raising concerns over the growing amount of public funds being consumed by salaries and employee benefits.

The report identifies Siaya, Kilifi, Tana River and Narok as the only counties that complied with the requirement under the Public Finance Management Act and county public finance regulations.

The law requires county governments to spend no more than 35 per cent of their total revenue on wages and benefits for public officers to ensure that sufficient funds remain available for development projects and service delivery.

CRA chairperson Mary Wanyonyi expressed concern over the high recurrent expenditure in several counties, noting that excessive spending on salaries and other operational costs was leaving little money for development activities.

“Personnel emoluments emerged as a major concern, with only four counties meeting the legal threshold requiring wage bills to remain below 35 per cent of total revenue,” reads the report.

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The commission also identified high personnel costs, poor revenue collection, delays in transfers from the national government and rising pending bills as some of the major challenges affecting county finances.

The situation is expected to persist in the 2026/2027 financial year, with most counties projecting wage bills above the statutory limit.

Only four counties proposed allocations within the required threshold. Kilifi projected spending 31 per cent of its revenue on personnel emoluments, while Migori, Kwale and Tana River each set aside 35 per cent.

Embu projected the highest wage bill at 56 per cent of its revenue, while 33 counties were above the legal threshold. Another ten counties did not provide wage allocations in their projections.

To control the rising wage bills, counties have proposed several measures, including conducting payroll audits to identify and remove ghost workers, freezing recruitment, transferring employees to other departments, automating services and limiting new employment to essential technical positions.

The report also highlights differences in how counties allocate and spend money on development projects.

Nairobi recorded the lowest development allocation over the period examined at 25 per cent. It also had the lowest actual development expenditure over the medium term, at just 12 per cent.

Other counties with low development expenditure included Kisii at 15 per cent, Kiambu at 16 per cent, Kisumu at 18 per cent and Mombasa at 20 per cent.

On the other hand, Marsabit recorded the highest development expenditure at 56 per cent, followed by Kilifi at 54 per cent, Mandera and Trans Nzoia at 52 per cent each, while Homa Bay recorded 31 per cent.

The commission further identified pending bills as a major challenge, particularly in Nairobi, Kiambu, Machakos, Kilifi and Mombasa, which reported outstanding obligations running into billions of shillings.

It also raised concerns over counties' ability to collect revenue locally and delays in receiving funds from the national government.

According to the report, 45 counties outlined financial risks and proposed measures to address them in their risk strategy papers. These included failure to meet revenue targets, delayed national government transfers, increasing pending bills, high wage costs and the effects of droughts, floods and other climate-related disasters.

Despite the challenges, CRA noted that counties had made progress in aligning their financial plans with national priorities and meeting some fiscal responsibility requirements.

However, weaknesses in revenue collection, wage bill management, efficient use of public funds and settlement of pending bills remained major concerns.

The commission recommended stricter enforcement of financial responsibility limits, the use of scientific models when forecasting revenue, timely submission of County Fiscal Strategy Papers and stronger efforts to increase locally collected revenue.

It also called on counties to manage personnel costs carefully and give priority to clearing pending bills to improve financial stability and service delivery.