41 counties remain in breach of salaries-to-revenue ratio limit: SRC » Capital News

NAIROBI, Kenya, Apr 29 – Forty-one counties remain in breach of the Public Finance Management (PFM) Act requirement that restricts spending on personnel emoluments to 35 per cent of revenues, a new analysis has revealed.

In its Second Quarter Wage Bill Bulletin covering the period October to December 2024, the Salaries and Remuneration Commission (SRC) reported a sharp increase on county expenditure on salaries and allowances from Sh38.69 billion in the first quarter to Sh52.16 billion in the second quarter of the 2024/2025 financial year — a 34.8 per cent increase

The spending exceeds the 35 per cent threshold prescribed under the PFM Regulations, 2015.

“The growth in county personnel expenditure is concerning and unsustainable,” the SRC said in a statement released on Tuesday.

“Only six counties — Nakuru, Kwale, Busia, Tana River, Narok, and Kilifi — adhered to the 35 percent personnel emoluments to ordinary revenue ratio as required by the PFM Act, 2012.”

While the proportion of personnel emoluments to total county expenditure declined from 69.5 per cent in Q1 to 61.9 per cent in Q2, it still remains far above the legal ceiling.

The personnel emoluments to ordinary revenue ratio also saw a modest drop, from 44.01 per cent to 41.13 per cent.

“This continued breach of the legal spending threshold constrains counties’ ability to fund development and essential services,” the Commission warned, urging counties to restructure their budgets and implement spending controls.

National govt with threshold

In contrast, the national government remained within acceptable limits.

The Controller of Budget reported that the national personnel emoluments bill is projected to rise from Sh170.29 billion in Q2 of FY 2023/2024 to Sh212.53 billion in the same period of FY 2024/2025.

However, the wage bill as a share of total revenue is expected to fall from 31.7 per cent to 25.7 per cent — well within the recommended threshold.

The SRC has reiterated its call for prudent fiscal management at both national and county levels, emphasizing the need for long-term sustainability in public wage management.