Parliament has passed the Public Finance Management Amendment (No. 3) Bill, 2024, with amendments. The bill seeks to amend the Public Finance Management Act to provide for the financing of transferred functions between the two levels of government following Article 187 of the Constitution.
County governments will be required to submit quarterly reports on their status of statutory deductions, including repayment plans for outstanding amounts. A new provision was added to address delays or failures by county governments in remitting employee salaries and statutory deductions, including taxes, pensions, and social health insurance contributions.
The bill also empowers the Controller of Budget to withhold funds from counties that persistently fail to remit statutory deductions like taxes, pension contributions, and social security.
Counties will now have more time to submit county finance documents. This follows MPs endorsing an amendment extending the timeline for submitting county fiscal strategy papers to the county assembly from February 28 to March 7, and the period for publishing the papers was increased from 14 to 21 days.
Lawmakers noted that the amendments will strengthen financial discipline and accountability in counties, ensuring timely remittance of statutory deductions and improving cash flow management.
Speaking on the Bill, Chairperson of Finance and National Planning, Kimani Kuria, pointed out, “The provisions addressing the financing of transferred functions are designed to avoid disruptions in service delivery during the transfer process. By requiring clear agreements on asset and liability management, the amendments mitigate potential disputes between the two levels of government.”
