The Public Finance Management (Amendment) (No. 3) Bill, 2024 (National Assembly Bills No. 44)

SPECIALISSUE

Kenya Gazette Supplement No. 189 (National Assembly Bills No.44)

REPUBLICOFKENYA

KENYA GAZETTE SUPPLEMENT

NATIONALASSEMBLYBILLS,2024

NAIROBI,1stNovember,2024

CONTENT

Bill for Introduction into theNational Assembly-

The Public Finance Management(Amendment)(No.3) Bill,2024

PRINTEDANDPUBLISHEDBYTHEGOVERNMENTPRINTER,NAIROBI

PAGE

989

THEPUBLICFINANCEMANAGEMENT

(AMENDMENT)(NO.3)BILL,2024

A Bill for

AN ACT of Parliament to amend the Public Finance

Management Act to provide for financial management in the transfer of functions between Article 187 of the Constitution and for connected purposes

ENACTED by theParliament of Kenya asfollows-

PARTI-PRELIMINARY PROVISIONS

• 1.This Act may be cited as the Public Finance
• Management (Amendment) (No. 3) Act,2024.

2. The Public Finance Management Act is amended by inserting the following new Part immediately after section 186-

PARTIVA-FINANCIALMANAGEMENTIN TRANSFER OFFUNCTIONS

Interpretation of this

186A.In this Part,unless the context otherwiserequires-

Part.

Cap.265F

Application of the Part to transfer of functions.

Financing transferred

functions.

"transfer agreement" means the agreement on transfer or delegation ofpowers,functions or competencies as provided for under section 26 of the Intergovernmental Relations Act.

186B. This Part applies to transfer of functions as provided for under Article 187of the Constitution and sections24 to 28 of the Intergovernmental Relations Act.

186C. (1) Subject to the Constitution, this Act and any other Act of Parliament, and with the approval of the National Assembly and the concerned county assembly,transferred functions shall

continue to be funded from previous sources as contained in the approved Short title.

Insertion ofnew

Part into Cap 412A.

Cost of transferred

functions.

budgets of the transferring level of

• government.
• (2) Where there is need for additional financial resourcesforatransferred function-
• (a) both parties shall consult and agree on the need for the additional
• financial resources;and
• (b) the transferring level of government shall provide the additional financial resources.
• (3)The process of approval and
• disbursement of the additional financial resources insubsection (2) shallbe provided for in the transfer agreement between the two levels of government.
• 186D.(1) The cost of the transferred functions shall be based on the costing framework provided in the national and county government budget manuals.
• (2) The cost of transferred functions as determined under subsection (l) shall form the basis for the additional financial resources for the transferred functions.
• (3) The additional financial resources for transferred functions-
• (a)in the case ofa county government to the national government for a financial year, shall be provided as a separate schedule in the budget estimates, identifying allocations from the county government revenue and clearly specifying appropriationsin-aid,additional allocations and proceeds from loans and grants; and
• (b)in the case of the national government to a county

Management of assets and liabilities.

government for a financial year, shall be provided as a separate schedule in the budget estimates, identifying allocations from the national government revenue and clearly specifying appropriationsin-aid,additional allocations and proceeds from loans and grants.

• (4) The allocations under subsection (3) shall be included in the budget estimates of both the county and national government and shall be submitted to Parliament and the respective county assembly for approval.

2. 186E. (1) A transfer agreement between the two levels of government shall, in addition to the requirements under section 26 of the Intergovernmental Relations Act, include a provision on acquisition, disposal andtransfer of assets and liabilities.

• (2) Where assets are acquired and liabilities incurred in the duration of a transfer of a function to either levelof government, the level of government receiving the functions shall-

4. (a) keep, maintain and update the register of assets and liabilities in accordance with the applicable 5. law;and 6. (b) takeappropriate emeasuresto ensure that at the end of the transfer period, the assets and liabilities are transferred to the transferringlevel ofgovernment.

• (3) The process of transfer of assets and liabilities upon the expiry of the transfer period shall be in accordance with the transfer agreement or as may be prescribed by the Cabinet Secretary in regulations.

Cash flow projections in relation to the transferred functions.

Quarterly and annualfinancial and non-financial reports.

• 186F. (1) The transferring level of government shall prepare cash flow projections based on revenue projections from various sources ofrevenue.
• (2)Thetransferring levelof government shall publish and publicize the cash flow projections within fifteen days of the commencementof the transfer period.
• 186G.(1) The accounting officer in a county government,in case of a transfer ofa functionfrom the national government to a county government, shall prepare and submit quarterly and annual financial and non-financial reports to the Controller Budget; the County Treasury; and the responsible national government entity.
• (2) The accounting officer in the national government in case of a transfer ofa function from a county government to the national government shall prepare and submit quarterly and annual financial and non-financial reports to the Controller of Budget;the County Treasury; and the
• responsible county government entity.
• (3) The copies of the reports prepared under sub sections (1) and (2) shall be submitted to the Senate,the National Assembly,the Auditor General and the respective county assembly in accordance with the Act.

MEMORANDUMOF OBJECTSANDREASONS

The principal object of this Bill is to amend the Public Finance Management Act, in order to provide for the financing of transferred functions between the two levels of government in accordance with Article 187 of the Constitution.

The Bill provides that transferred functions shall continue to be funded

from previous sources as contained in the approved budgets of the transferring level of government and that the cost of the transferred functions shall be based on the costing frameworkprovided in the national and county government manuals.

Additionally,the Bill provides that a transfer agreement between the two levels of government shall include a provision on acquisition,disposal and transfer of assets and liabilities.Further,that the transferring level of government shall be required to prepare cash flow projections based on revenue projections from various sources of revenue.

Statement on the delegation of legislative powers and limitation of

fundamental rights and freedoms

This Bill confers upon the Cabinet Secretary the power to make

Regulations on the process of transfer of assets and liabilities upon the expiry of the transfer period in accordance with the transfer agreement.

TheBill doesnot limit any fundamental rightsorfreedoms.

Statement on whether the Bill concerns county governments

The Bill contains provisions concerning county governments within the meaning of Article 1i0 of the Constitution and the Fourth Schedule to the Constitution and is therefore a Bill concerning county governments.

Statement as to whether the Bill is a money Bill within the meaning of

Article 114 of the Constitution

The Bill is a money Bill within the meaning of Article 1l4 of the Constitution.

Dated the 23rd October,2024.

KIMANIICHUNG'WAH,

Leader of Majority.