THE COUNTY GOVERNMENT OF TAITA TAVETA MEDIUM TERM 2018 COUNTY FISCAL STRATEGY PAPER “Accelerated socio-economic Transformation for all DATUZENS and residents of Taita Taveta County” FEBRUARY 2018 © Taita Taveta County Fiscal Strategy Paper (CFSP) 2018 To obtain copies of the document, please contact: Taita Taveta County Treasury P.O.Box 1066-80304, Wundanyi, KENYA. Tel: 0788 186 436/0718 988 717 The document is also available on the County Government website: www.taitataveta.go.ke 2018 County Fiscal Strategy Paper 2 FOREWORD The 2018/19 County Fiscal Strategy Paper (CFSP) is the first to be prepared under this second County Government’s administration. This is an annual paper that outlines the priority policies and strategies to be employed by the County government to meet its overall objective of improving the livelihoods of its citizens. The priorities contained in this document have been drawn from the draft second generation County Integrated Development Plan (CIDP) 2018-2022, Medium Term Plan (MTPIII) as well as from the manifesto of H.E the Governor Granton Graham Samboja. The County Government has set out a robust and comprehensive programme of creating an industrious and wealthy society benefiting from optimal exploitation of natural resources. This will be achieved through the implementation of deliberate strategies geared towards establishment of responsible enterprises and value addition in agriculture, ranching and tourism. The key areas of focus aimed at actualizing these broad objectives are highlighted below:- 1. Increasing access to clean, quality and potable water for all households, schools and health facilities. 2. Improved food security and community resilience through provision of adequate water for irrigation and livestock throughout the County. 3. Improved income and livelihood though value addition, marketing and establishment of fruits, tomatoes, beef and dairy processing plants. 4. Investing sufficiently in quality, accessible and affordable health care services including provision of prerequisite equipment, drugs and health personnel. 5. Ensuring quality education through development of ECDE and Library services, equipping of schools and enhanced bursaries allocation 6. Provision of quality infrastructure including improved roads network, ICT, quality housing and adoption of alternative sources of energy 7. Employment and wealth creation through provision of conducive environment necessary for the establishment of cottage and small and medium industries. 8. Preservation and promotion of Taita Taveta cultural heritage through establishment of cultural centres and branding of our culture and artefacts. 9. Environmental protection and conservation for sustainability and posterity. 10. Empowerment of Youth, women, and vulnerable members of the community through establishment of small scale cooperatives, talents identification and nurturing and improved access to cheap and affordable credit. The second County government has inherited from the previous regime, numerous structural, fiscal and human resources related challenges. These include: 1. Very low own source revenue generation thus hindering development expenditure. 2. Huge amounts of pending bills on projects, stalled and abandoned projects as a result of poor budgeting and expenditure management; disregard to the provisions of the PFM Act,2012 3. Corruption and pilferage of public funds 4. Low human resource productivity due to lack of motivation and unconducive work environment 2018 County Fiscal Strategy Paper 3 The County government will continue to engage with the National Government and various Donor agencies to bridge the financial gap especially in critical areas of water, health and infrastructure. This strategic paper is divided into 4 chapters: Chapter 1 gives the general overview and rationale for preparation of this document. It also highlights the major achievements made and challenges faced by the county government under during the implementation of the first County Integrated Development Plan(2013- 2017). The chapter outlines the fiscal perfomance of the county interms of revenue generation and expenditure analysis. Chapter 2 outlines the economic context in which the 2018/19MTEF budget will be prepared. It provides an overview of the recent economic development and macro-economic outlook covering the national and county scene. It further provides a basis for the projections of revenue and expenditure for FY 2018/19 and the medium term. Chapter 3 outlines the fiscal framework underwhich the 2018/19 budget and the medium term is based. It briefly highlights the county’s resource envelop for 2018/19 and further presents the spending priorities for the next budget. Chapter 4 finally presents the sectors and departmental spending ceilings for 2018/19 budget and the medium term. Hon Dr Vincent Masawi COUNTY EXECUTIVE COMMITTEE MEMBER-FINANCE AND PLANNING. 2018 County Fiscal Strategy Paper 4 ACKNOWLEDGEMENTS The drafting and finalisation of this 2018 County Fiscal Strategy Paper (CFSP) has been a collective effort of various stakeholders with H.E The Governor Granton Graham Samboja taking the leadership mantle. We extend our most sincere gratitude to H.E The Governor, Granton Graham Samboja, Deputy Governor- H.E Majala Mlagui and the CECM for Finance and Economic Planning Hon. Dr Vincent Masawi for their leadership in the entire process. Special appreciation goes to all the County Executive Committee Members role and guidance as team leaders during the public participation phase and sector leads during the integration phase. The role played by the County Budget and Economic Forum (CBEF) is also equally appreciated having just been inaugurated recently. We give gratitude to the CIDP 2 and 2018 CFSP technical secretariat lead by Mr. Matthew Njoroge-Special Programmes. The other members of the technical secretariat whose contribution in this paper is immense include; Rhodah Mwashigadi- Ag.Chief Officer for Trade, Benjamin Odago-Planning and Budgeting, John Mwakima- Deputy Sub-County administrator for Wundanyi and Dan Githira- Physical Planning. Others include: Laban Kinyai- Budget Officer and Phillip Kidelo- Budget Officer. Others Include Wallace Mwaruma and Stanley Maigacho from Special Programmes, Francis Rongaine- Public service and Kenneth Ndungu- UNDP Volunteer We remain grateful to all Sub-county and Ward Administrators for coordinating and moderating the public participation forums at ward levels. Lastly is to express appreciation to Civil Society organizations, Local leaders, the general public and all other stakeholders who took their time to participate in providing vital information in the various meetings. Joyce Kambe County Chief Officer, Finance and Planning 2018 County Fiscal Strategy Paper 5 Table of Contents FOREWORD ........................................................................................................................................... 3 ACKNOWLEDGEMENTS ......................................................................................................................... 5 Legal Basis for the Publication of the County Fiscal Strategy Paper ..................................................... 8 Fiscal Responsibility Principles in the Public Finance Management Law ............................................. 9 CHAPTER ONE: ACCELERATED SOCIO -ECONOMIC DEVELOPMENT FOR THE COUNTY’S PROSPERITY10 Broad medium term priorities ........................................................................................................... 10 County’s Fiscal Performance for 2013/14 -2017/18 .......................................................................... 14 Revenue Analysis ........................................................................................................................... 14 Expenditure ................................................................................................................................... 15 CHAPTER TWO: RECENT NATIONAL ECONOMIC DEVELOPMENT AND POLICY OUTLOOK ............ 18 Recent National Economic Developments and Outlook ..................................................................... 18 National economic development pillars in the Medium Term ........................................................... 18 CHAPTER THREE: FISCAL FRAMEWORK AND COUNTY STRATEGIC PRIORITIES FOR 2018/19 AND THE MEDIUM TERM 19 Overview of the 2014/15 -2018/19 Budget Framework .................................................................... 19 2018/19 FISCAL FRAMEWORK AND POLICY ....................................................................................... 19 Fiscal Policy ........................................................................................................................................ 19 Revenue side .................................................................................................................................. 20 Expenditure side ............................................................................................................................ 20 2018/19 Revenue Projections ............................................................................................................ 21 2018/19 Expenditure Projections ...................................................................................................... 21 Summarized County Developmental Challenges ............................................................................... 22 County’s Strategic Priorities for 2018/2019 and the medium term ................................................... 23 CHAPTER FOUR: MEDIUM TERM EXPENDITURE ESTIMATES AND DEPARTMENTAL CEILINGS ............ 24 Details of Sectoral and Departmental Priorities and Baseline Ceilings............................................... 24 Risks to implementation of 2018/2019 priorities .............................................................................. 28 Annex 1: Proposed medium term departmental baseline Ceilings ................................................... 29 Annex 2: Own Source Revenue performance and Projections ........................................................... 30 2018 County Fiscal Strategy Paper 6 LIST OF ACRONYMS AND ABREVIATIONS AiA Appropriation in Aid BOPA Budget Outlook Paper BPS Budget Policy Statement CA County Assembly CADP County Annual Development Plan CBROP County Budget Review and Outlook Paper CFSP County Fiscal Strategy Paper CPI Consumer Price Index CPSB County Public Service Board EU European Union FY Financial Year GDP Gross Domestic Product KCB Kenya Commercial Bank KNBS Kenya National Bureau of Statistics KPA Kenya Ports Authority KRA Kenya Revenue Authority Kshs Kenya Shillings MTEF Medium Term Expenditure Framework MTP Medium-Term Plan OSR Own-Source Revenue PFMA Public Financial Management Act PPP Public Private Partners SBP Single Business Permit SGR Standard Gauge Railway SWG Sector Working Groups 2018 County Fiscal Strategy Paper 7 Legal Basis for the Publication of the County Fiscal Strategy Paper The County Fiscal Strategy Paper is prepared in accordance with section 117 of The Public Finance Management Act, 2012 which stipulates that: 1. The County Treasury shall prepare and submit to the County Executive Committee the County Fiscal Strategy Paper for approval. 2. The County Treasury shall submit the approved County Fiscal Strategy Paper to the county Assembly by the 28th February in each year. 3. The County Treasury shall align its County Fiscal Strategy Paper with the national objectives in the Budget Policy Statement. 4. In preparing the County Fiscal Paper, the County Treasury shall specify the broad strategic priorities and policy goals that will guide the county government in preparing its budget for the coming financial year and over the medium term. 5. The County Treasury shall include in its County Fiscal Strategy Paper the financial outlook with respect to county government revenues, expenditures and borrowing for the coming financial year and over the medium term. 6. In preparing the County Fiscal Strategy Paper, the County Treasury shall seek and take into account the views of:- a) The Commission on Revenue Allocation b) The public c) Any interested persons or groups; and d) Any other forum that is established by legislation 7. Not later than fourteen days after submitting the County Fiscal Strategy Paper to the County Assembly, the County Assembly shall consider and may adopt it with or without amendments. 8. The County Treasury shall publish and publicize the County Fiscal Strategy Paper within seven days after it has been adopted by the county assembly. 2018 County Fiscal Strategy Paper 8 Fiscal Responsibility Principles in the Public Finance Management Law The public finance management (PFM) Act, 2012 sets out the following fiscal responsibility principles to ensure prudency ant transparency in the management of public resources; 1. The county governments’ recurrent expenditures shall not exceed the total revenue. 2. Over the medium term, a minimum of thirty percent of the county government budget shall be allocated to development expenditures. 3. The county governments’ expenditures on wages and benefits for its public officers shall not exceed a percentage of the county governments’ total revenue as prescribed by the executive member for finance in regulations and approved by county assembly. 4. Over the medium-term the government borrowing shall be used only for the purpose of financing development expenditures and not recurrent expenditure 5. The county debt shall be maintained at sustainable levels as approved by county assembly 6. The fiscal risks shall be maintained prudently; and 7. A reasonable degree of predictability with respect to the level of tax rates and tax bases shall be maintained taking into account any reforms that may made in the future. 2018 County Fiscal Strategy Paper 9 CHAPTER ONE: ACCELERATED SOCIO -ECONOMIC DEVELOPMENT FOR THE COUNTY’S PROSPERITY Overview This 2018 County Fiscal Strategy Paper (CFSP) is the first to be prepared under the second government in Taita Taveta. It is prepared in accordance with the provisions of the Public Financial Management Act, 2012 cap 117 and aligned to the 2018 Draft Budget Policy Statement by the National Treasury. In line with the provisions of the law, the CFSP presents the fiscal objectives for the FY 2018/19 and medium term. It further highlights the broad strategic priorities and policy goals that will guide the County government in preparing its 2017/18 budget and the medium term. Broad medium term priorities These broad objectives will be achieved through the eleven county priorities highlighted below:- 1. Increasing access to clean, quality and potable water all households, schools and health facilities. 2. Improved food security and community resilience through provision of adequate water for irrigation, livestock and wildlife throughout the County. 3. Improved income and livelihood though value addition, marketing and establishment of fruits, tomatoes, beef and dairy processing plants. 4. Investing sufficiently in quality, accessible and affordable health care services including provision of prerequisite equipment, drugs and health personnel. 5. Ensuring quality education through development of ECDE and Library services, equipping of schools and enhanced bursaries allocation 6. Provision of quality infrastructure including improved roads network, ICT, quality housing and adoption of alternative sources of energy 7. Employment and wealth creation through provision of conducive environment necessary for the establishment of cottage and small and medium industries. 8. Preservation and promotion of Taita Taveta cultural heritage through establishment of cultural centres and branding of our culture and artefacts. 9. Environmental protection and conservation for sustainability and posterity. 10. Empowerment of Youth, women, and vulnerable members of the community through establishment of small scale cooperatives, talents identification and naurturing and improved access to cheap and affordable credit. Increasing access to clean water for domestic, livestock and irrigation The department of water and irrigation has been assigned the storm water management, provision of water services and development of irrigation infrastructure. The department was allocated Kshs. 164.9 Million in FY 2013/14 of which Kshs.23.1 Million was for recurrent expenditure and Kshs. 141.8 Million for the development budget. In the FY 2014/15 budget the department was allocated Kshs. 395.8 Million accounting for 9.5% of the total county budget. The budget for FY 2015/16 indicates that the department was allocated Kshs. 317.9 Million accounting for 8.6% of the total County budget. The 2016/17 allocation comprised of Kshs 298.4 Million and Kshs. 21.4 Million for development and recurrent expenditures respectively. In FY 2017/18 the water department has been allocated a total of Kshs 352 Million to execute its mandate. 2018 County Fiscal Strategy Paper 10 The department of Water and Irrigation has completed over 80 projects since 2014 and is undertaking implementation of 150 projects spread all over the county .Major focus of the projects include rehabilitation of existing pipelines, purchase of water tanks, drilling and equipping of boreholes construction of dams and wells and protection of water catchments . The department has also rehabilitated irrigation infrastructure bringing approximately 5700 acres of land under Irrigation. Ensuring food security and investing in value addition and Promotion of livestock and fisheries The Agricultural Sector is the backbone of Taita Taveta County’s economy and is the main means of livelihood for most of the citizens. Sustained agricultural growth remains critical in uplifting the living standards of our people as well as generating rapid economic growth, increase income and employment creation. The sector comprises of Agriculture, Livestock development, Veterinary services and fisheries development During the FY 2013/14, the department was allocated Kshs 119.8 Million of which Kshs 73.1 million was for recurrent expenditure and Kshs 46.7 Million for development. In the FY 2014/15 the total allocation to the department was Kshs 131 Million for both recurrent and development expenditures. The FY 2015/16 indicates a departmental allocation of Kshs 281.5 Million accounting for 1.5% of the total county budget. This amount comprised of Kshs 130.5 Million and Kshs 151 Million for recurrent and development expenditures respectively. In the FY 2016/17, the department was allocated Kshs 309.9 Million of which Kshs 146.2 Million for recurrent expenditures and Kshs 163.7 Million for development. In FY 2017/18, the department has been allocated a total of Kshs. 175 Million In Agriculture sub sector (crop development section) the completed projects were as follows;  32.5 tonnes of assorted seed ffor both drought tolerant and high value seed were procured and distributed to farmer beneficiaries.  8000 Tissue culture banana plantlets were distributed,  6.5 tonnes of seed potato was introduced to farmer beneficiaries in Wundanyi and Mwatate sub counties.  3000 Macadamia seedlings were distributed to farmer beneficiaries in Werugha and Wundanyi wards.  8 Green houses were procured and installed for technology transfer.  5 farm tractors and 4 hand drawn were procured and distributed to improve Agricultural mechanization services and demonstrations.  8 water pumps and 40 pipes procured  4 Drip kits for a quarter of an acre procured  Procurement of 3 Motorized solo pumps  Procurement of assorted maize seed varieties (10 Tons)  Procurement of Farm Yard Manure (14 lorries @ 7 tons)  Tomato processing and packaging machine (1) was procured  Procurement of 0.5 Tons assorted seed for Horticulture  Rehabilitation of Sagalla fruit tree nursery through production and grafting of 9000 citrus seedlings  Excavation of Water pans for crop production In the livestock sub-sector, completed projects are the purchase and distribution of 38 breeding Boran and Sahiwal stock ; purchase and distribution of 125 Galla goats to small 2018 County Fiscal Strategy Paper 11 scale farmers to improve goat meat production. Other key projects are rehabilitation and routine maintenance of Mwatate livestock farm and Bachuma Livestock multiplication centres; establishment of 4 AI centres construction of one fish banda at Lake Jipe and restocking of Lake Jipe and Ngerenyi Dam with tilapia fingerlings. Investing in quality, accessible and affordable health care services In FY2015/16, the department was allocated Kshs.1.2 Billion comprising of normal allocation and conditional grants. The allocation which was 30.87% of county budget marked an increase of Kshs 793 Million (195%) compared to FY 2014/15 which was Kshs. 406 Million and 9.8% of county budget .In the 2015/16 allocation Ksh.100 Million (84%) is to support recurrent activities while ksh198 Million (16%) development. In the FY 2016/17 the department was allocated Kshs 1.04 Billion comprising of Kshs 840 Million recurrent and Kshs 214 Million development. The department of health has been allocated a total of Kshs 357 Million. Improving access to ECDE, Polytechnics and Library services. The county education sector comprises the early childhood education support services, youth training and library services. The county also supports education of needy students in secondary and college through provision of bursaries and Loans. In the FY 2013/14, the department was allocated a total of Kshs 201.2 Million comprising of Kshs 137.3Million for recurrent expenditures and Kshs 63.9 Million for development activities. The department’s total allocation for FY 2014/15 amounted to Kshs 372.5 Million accounting for 9.0% of the total county budget. The FY 2015/16 budget allocation to the department stands at Kshs 466.5 Million. The FY 2016/17 budget allocation to the department was Kshs 569.8 Million where the recurrent expenditure was Kshs 399.7 Million and development expenditure Kshs 170 Million. In the FY 2017/18, the department has been allocated a total of Kshs 313 to execute its mandate. Some of the milestones achieved by the department include: Rolling out of ECDE feeding Program to marginalized ECDE centres (program rolled out in 67 ECDE centres across the county); Rolling out of County Mobile Library Services Project to students in identified educationally marginalized Zones (Kimorigo, Tausa, Rong’e and Wumingu Zones; Training of school librarians in the identified zones was done (two linguistic teachers in each Secondary, Primary, Youth Polytechnic and ECDE supervisors in the 4 zones); Established a county education fund for needy students at secondary and tertiary level and construction of Twin workshop at Chumvini in Taveta, Tausa, Ronge Juu and Mwagafwa Youth Polytechnics. The Department has also supported both the KCPE and KCSE candidates through provision of:- Sanitary Towels to Girls Candidates and Food for the Candidates in public secondary and primary schools. Empowerment of Youth, women, and vulnerable members of the community and Promotion trade The department of trade and community affairs’ mandate covers the strategic implementation of Cooperatives, Youth, Sports, Culture, Trade and Gender programmes. The role of the department is to contribute to transformation of the social and economic status of residents of the county through a coordinated and harmonized integration of the various activities. 2018 County Fiscal Strategy Paper 12 In the FY 2013/14, the department was allocated a total of Kshs 153.3 Million comprising of Kshs 49.1 Million for recurrent expenditure and Kshs 104.2 Million for development activities. The budgetary allocation for 2014/15 was Kshs 181.7 Million. In the FY 2015/16 the department has a total allocation of Kshs156.7Million for both development and recurrent expenditure. In the FY 2016/17, the department was allocated a total of Kshs 202 Million comprising of Kshs 57.8 Million for recurrent expenditure and Kshs 144 Million for development activities. In FY 2017/18 the total allocation stands at Kshs 212 Million. In this sub-sector, 51 projects have been initiated with the key initiative including establishment of a Biashara Business Centre. Other projects include those geared towards strengthening the cooperative societies, sports, trade development, culture and support to youth development activities. Land planning, management and mining Issues affecting the land management include: outdated laws and limited implementation of land policies; multiple land interests on the same piece of land; Inadequate funds for land administration system; Inadequate mapping capacity; Deteriorating and missing land administration records; Inadequate decentralization of land registration services; Inadequate security of land ownership and insecure land-related investments; Inadequate Dispute Resolution Mechanisms; Increasing land evictions on registered land and customary land; Unregistered land rights in the mineral rich areas and Shortage of qualified professionals. The land management activities comprises of functions allocated to county government and spearheaded by department of lands and mining. In the FY 2014/15, the lands and physical planning department was allocated a total of Kshs 18.5 Million for both recurrent and development expenditures. The FY 2015/16 budgetary allocation, to the Lands and Mining is Kshs 19.1 Million comprising of Kshs 8.9 Million for recurrent expenditure and Kshs 10.2 Million for development expenditure The FY 2016/17 budgetary allocation, to the Lands and Mining is Kshs 40.7 Million comprising of Kshs 37.4 Million for recurrent expenditure and Kshs 3.3 Million for development expenditure. The department has been allocated a total of Kshs 71 Million Investing in physical infrastructure including ICT and Promotion of Energy and industry The key mandate of the public works and infrastructure department is to spearhead infrastructure development including planning and supervising all construction of county government’s physical projects in health, education, roads and other sectors. The department was allocated Kshs 289.6 Million in the FY 2013/14 budget which comprised of Kshs 25.6 Million for recurrent and Kshs 264.0 Million for development. In the FY 2014/15, the department’s total budgetary provision was Kshs 298 Million for both recurrent and development expenditures. The FY 2015/16 budget indicates a total allocation of Kshs 307.5Million to the department. Further, the department expects to receive Kshs 42 Million as specific allocation from the RMFLF. The department has been allocated Kshs 296 Million in the FY 2016/17 budget which comprised of Kshs 56.9 Million for recurrent and Kshs 239 Million for development. 2018 County Fiscal Strategy Paper 13 County’s Fiscal Performance for 2013/14 -2017/18 Revenue Analysis The County Government has two major sources of county revenue to fund its operations; equitable share from National government and local revenue. Over the years the equitable share from the national government has accounted for over 85 percent of the County’s resource envelope. In the FY 2013/14 a total of Kshs 2.4 Billion was received as equitable share while Kshs 147 Million was raised as local revenue. A total of Kshs 2.8 Billion was received as equitable share in FY 2014/15 while Kshs 216 Million was generated as local revenue. In FY 2015/16 the county Government received Kshs 3.3 Billion from the equitable share while Kshs 3.6 Billion was received in FY 2016/17. In FY 2017/18, the county expects equitable share amounting to 3.89 Billion. In terms of Own Source revenue, there was a significant decline from Kshs 216 Million in FY 2014/15 to Kshs 171 Million in FY 2015/16 and Kshs 172 Million in FY 2016/17. During the first half of FY 2017/18 (Jul-Dec 2017) the County received Kshs 1.96 Billion as exchequer releases. Table 1: Flow revenue from the exchequer per Month MONTH 2015/16 2016/17 2017/18 JULY 264,765,455 285,685,304 272,706,000. AUGUST 297,861,138 321,395,967 272,706,000 SEPTEMBER 264,765,455 285,685,304 350,622,000 OCTOBER 281,313,296 303,540,636 370,101,000 NOVEMBER 297,861,137 321,395,967 389,580,000 DECEMBER 264,765,455 285,685,304 311,664,000 TOTAL 1,671,331,936 1,810,793,482 1,967,379,000 Local Revenue Analysis The total local revenue collected during the 1st half of FY 2017/18 is Kshs 57.8 Million compared to Kshs 74.4 Million and Kshs 93.9 Million during a similar period in FY 2016/17 and FY 2015/16 respectively. Table 2: First Half Local revenue collection per month 2014/16 2015/16 2016/17 2017/18 Budgeted Amount 155,202,663 169,000,000 169,232,755 Actual Amount 93,965,545 71,930,954 74,485,557 57,847,885 Variance (83,271,709) (94,514,443) (111,384,870) The total own Source revenue generation fell short of the target by 67 percent of the budgeted amount. Agriculture, Livestock and Fisheries was the leading department in terms of meeting the half year target with a variance of 44 percent while Health Services fell short of the target by 85%. 2018 County Fiscal Strategy Paper 14 Table 3: Departmental Half Year targets and actual performance DEPARTMENT First Half Targets Actual Half % Variance Collection Administration and Devolution 4,308,656 2,321,320 -46% Agriculture, Livestock and 5,150,782 2,901,555 -44% Fisheries Tourism, Environment and 13,517,370 3,078,365 -77% Natural Resources Finance and Planning 20,187,580 8,136,892 -65% Health services 44,222,334 6,547,532 -85% Lands and Mining 31,818,152 9,657,856 -70% Public works and Infrastructure 27,781,776 12,872,252 -54% Trade and Community affairs 30,678,554 12,332,113 -60% Water and Irrigation 28,622 - TOTAL 177,693,826 57,847,885 - 67% The leading sources of local revenue during the period under review were: General cess (6.9 Million); Market fees (5.7 Million); Hospitals (4.6 Million); House rent (4.1 Million), Land rates (3.8 Million) and Single Business Permits (3.7 Million.) Expenditure In the first half FY 2017/18, the total expenditure for the County amounted to Kshs 1.43 Billion. This comprised of Kshs1.39 Billion as recurrent expenditure accounting for 97 percent of the total expenditure and Kshs 41.6 Million as development expenditure representing 3percent of the total expenditure. The low expenditure on the development vote in the period under review can be attributed to non-disbursement of development funds by the exchequer. Table 4: Total expenditure per department DEPARTMENT RECURRENT DEVELOPMENT TOTAL A/RATE EXPENDITURE Recurrent Recurrent Development Development expenditure. Absorption expenditure. Absorption rate rate County Assembly 199,630,828 14% 0 0% 199,630,828 14% Public Service and Administration 898,318,252 65% 4,500,000 11% 902,818,252 63% Governors and Deputy Governor’s office 52,726,719 4% 0 0% 52,726,719 4% Finance and Planning 140,864,325 10% 0 0% 140,864,325 10% Agriculture livestock and Fisheries 6,180,947 0% 0 0% 6,180,947 0% Water and Irrigation 4,294,314 0% 14,022,955 34% 18,317,269 1% Education and Library Services 38,960,570 3% 13,265,160 32% 52,225,730 4% Health Services 26,767,389 2% 538,530 1% 27,305,919 2% Trade and Cooperative Development 5,640,783 0% 1,029,800 2% 6,670,583 0% County public service board 7,021,870 1% 0 0% 7,021,870 0% Public works and Infrastructure 3,638,533 0% 4,540,534 11% 8,179,067 1% Lands, Environment and Natural 4,078,038 0% 0 0% 4,078,038 0% Resources Industrialization, Energy, Mining, 2,420,380 0% 3,640,071 9% 6,060,451 0% Research and ICT Tourism, Environment and Natural 1,638,225 0% 0 0% 1,638,225 0% Resources Total 1,392,181,174 100% 41,637,050 100% 1,433,818,224 100% 2018 County Fiscal Strategy Paper 15 Analysis of Development Expenditure Water and irrigation, Education, Public service and Public works had the highest development expenditures at 34, 32, 11 and 11 percent of the total development expenditure respectively. Analysis of Recurrent expenditure The high expenditure in the Public service and Administration department is as a result of payment of all County salaries that is done Human resource section of the department for ease of management. The County assembly, Finance and Planning, education and health registered notable expenditures at 14, 10, 3 and 2 percent of the total expenditure respectively. 2018 County Fiscal Strategy Paper 16 Table 5: Major Recurrent Expenditure items per Department Department Personnel Foreign Domestic Hospitality Training Printing Others T/Recur exp. A/rate emoluments travel travel ,conferences and & catering advertising County Assembly 136,905,245 19,081,130 30,062,857 4,740700 1,674,000 1640220 7,089,739 199,630,829 14% Admin and 889,171,997 303,150 3,010,715 1,280,200 1,442,950 117,160 3,003,394 898,329,566 65% Devolution Governor’s 4,244,400 4,818,072 15,099,575 6,476,984 5,535,409 5,740,272 10,812,007 52,726,719 4% Office Finance and 36,011,562 33,073,461 38,488,712 5,934,815 3,835,000 5,825,361 17,695,414 140,864,325 10% Planning Agriculture 835,540 2,634,986 198,885 408,783 216,060 1,886,993 6,180,947 0% Water and 892,825 1,640,212 1,060,850 500,273 200,154 4,294,314 1% Irrigation Education and 2,037,040 743,400 1,008,400 33,090,120 330,400 1,751,330 38,960,400 4% Library Health Services 2,237,049 6,177,710 823,000 1,007,470 16,522,160 26,767,389 2% Trade and 2,355,783 932,605 88,328 2,264,067 5,640,783 0% community Affairs County Public 1,437,400 1,999,800 466,000 582,800 262,000 2,273,870 7,021,870 0% Service Board Infrastructure 1,374,177 104,340 903,965 1,256,051 3,638,533 1% and Public works Lands physical 1,775,839 302,200 2,000,000 4,078,039 0% planning Environment and 531,845 141,280 206,400 48,000 710,700 1,638,225 0% Natural Resources Total 1,066,333,204 64,745,429 106,535,822 23,731,109 48,394,367 15,186,943 67,254,299 1,392,181,173 100% % of Total 77% 5% 8% 2% 3% 1% 5% 100% 2018 County Fiscal Strategy Paper 17 CHAPTER TWO: RECENT NATIONAL ECONOMIC DEVELOPMENT AND POLICY OUTLOOK Recent National Economic Developments and Outlook According to the National Treasury’s 2018 Budget Policy Statement(BPS), Kenya’ Real GDP is projected to expand by 5.3 percent in FY 2017/2018, 5.9 percent in FY 2018/2019, 6.3 percent in FY 2019/2020 and 6.8 percent by FY 2020/21. This growth will be supported by sustained investment in infrastructure, strong agricultural production due to improved weather conditions, buoyant services sector, continued recovery in tourism, increased investor and consumer confidence, and macroeconomic stability. In addition, measures being undertaken by the Government under “The Big Four” Plan are to boost the manufacturing sector; enhance food security and nutrition; create affordable housing; and achieve Universal Health Coverage are expected to boost growth, create jobs and ultimately promote inclusive growth. Inflation is currently within set target and is expected to remain so in the medium term underpinned by prudent monetary policy, favourable weather outlook, relatively lower international oil prices, and a stable exchange rate which is expected to dampen any risks of imported inflation. The interest rates are expected to remain low and stable over the medium term supported by improved liquidity conditions. Kenya’s external position is projected to strengthen over the medium term supported by a narrower current account deficit. The improvement in the overall balance reflects lower petroleum products import bill reflecting lower international oil prices and improved performance of tea and horticulture exports; strong diaspora remittances; recovery in tourism, and increased foreign direct investment in infrastructure. National economic development pillars in the Medium Term The National Treasury’s 2018 Budget Policy Statement (BPS) indicates that the national government will implement the “Big Four” economic Strategy. This strategy aims at:- 1. Supporting value addition and raising the share of the Manufacturing sector to GDP to 15% by 2022 ; 2. Enhancing food and Nutrition security to all Kenyans; 3. Providing universal health coverage to guarantee quality and affordable health care to all Kenyans; 4. Provision of affordable and decent housing for all Kenyans; and 5. Further consolidate gains made in devolution in order to provide better service delivery and enhanced economic development. 2018 County Fiscal Strategy Paper 18 CHAPTER THREE: FISCAL FRAMEWORK AND COUNTY STRATEGIC PRIORITIES FOR 2018/19 AND THE MEDIUM TERM Overview of the 2014/15 -2018/19 Budget Framework The total actual county resource envelop for the county has been slightly increasing annually. This can be attributed to the marginal yearly increase in the amounts the County receives from the national treasury as its equitable share. It is however notable that Own Source Revenue has experienced an up and down trend over the years. In FY 2014/15 the resource envelop for the County amounted to Kshs 3.6 Billion comprising of Kshs.2.8 Billion from the equitable share and Kshs.216 Million raised as Own Source Revenue. During the FY 2015/16, the actual resource envelop realized was Kshs 3.7 Billion out of the budgeted resource envelope of Kshs 4.16 Billion. This represented at least 89 percent of the budgeted revenue for FY 2015/16. The amount realized consisted of Kshs 3.3 Billion from the equitable share, Kshs. 160 Million as Own Source Revenue and Kshs 223 Million from conditional funds directed to specific sectors. FY 2016/1, saw the actual resource envelop realized increasing to Kshs 3.9 Billion out of the budgeted amount of Kshs 4.66 Billion, representing 82 percent of the budgeted revenue. The amount realized consisted of Kshs 3.6 Billion from the equitable share, Kshs. 172 Million as Own Source Revenue and Kshs 140.2 Million as conditional grants directed to specific sectors including health services and roads. A total of Kshs 36 Million with respect to World Bank HSSF meant for FY 2016/17 was however received on 30th July 2017(FY 2017/18). For the first half(July-December) of FY 2017/18 the County has received a total of Kshs 1.96 Billion from the exchequer inclusive of Kshs 57 Million as Own Source Revenue. 2018/19 FISCAL FRAMEWORK AND POLICY Fiscal Policy The major policy thrust of the FY 2018/19 and the medium term for this second County Government is accelerated socio-economic transformation with special emphasis to food security and wealth creation. This agenda is aimed at; a) Improvement of access to clean and potable water for both urban and rural areas b) Increasing agricultural and livestock production for food security and wealth creation; c) Improving access to quality and affordable social services-including quality Health care and education d) Socio-economic empowerment of the youth, Women and PWDs through employment creation and ease of access to credit e) Reduction in the cost of doing business and attracting investments through development of key infrastructure including roads network and energy. 2018 County Fiscal Strategy Paper 19 Over the medium term, the Government will pursue Fiscal and management policies aimed at streamlining recurrent expenditure while at the same emphasizing on capital investment. Some of the policies and strategies to be adopted include: 1. Feasibility studies and other related initial studies before commencing a project should be made mandatory for all proposed projects. Technical reports should be given to form the basis of project conceptualization and implementation. 2. Planning, approval and implementation of projects should be based on viability and sustainability of the same 3. For huge capital projects the planning and implementation should be in phases to ensure efficiency considering the limited resource basket per disbursement. 4. The county should enhance its local revenue collection to supplement the funds received from the Exchequer. Revenue side 1. Improved collection and efficiency in Own Source Revenue including full automation and restructuring of systems. The County should avoid over relying on the equitable share for development expenditure. 2. There is need to urgently carry out a baseline survey to determine the County’s potentiality in-terms of revenue and new revenue streams. 3. There is need to have a new and up dated valuation roll with a view of enhancing revenue collection. 4. Ensuring that revenue targets are set by the revenue generating departments/sections with a reward mechanism for good performance( A certain agreed percentage to be allocated/ring-fenced to the department/section) 5. Promotion of Private-Public Partnerships (PPPs) and reaching out to donors to enhance resource mobilization 6. Educating the public on the need to pay their fees and rates 7. Strengthening the capacity of the resource mobilization unit Expenditure side 1. The completion of all critical and viable ongoing programmes and projects should be given the first priority in funds allocation. 2. The County government should develop a policy on Projects management that will ensure prioritization of high impact quick win projects. This policy will discourage the thin spreading of resources with little or no corresponding benefit. 3. On the issue huge pending bills (expenditure arrears, the County will set up a pending bills committee to verify the authenticity of all pending bills and formulate strategies to eliminate all arrears. 4. Non-priority expenditures should be avoided while funding to areas with high impact intensified. 5. To address the high wage bill, the county will implement the recommendations contained in the Capacity Assessment and Rationalization Programme (CARPS) and Job Evaluation reports to ensure optimal level of staff and at the same time increasing efficiency. 6. Further to streamline expenditure, there is need to strengthen monitoring, evaluation and reporting at the project/programme, department and county levels. 7. To link planning and budget formulation it is imperative that the Sector working Groups (SWGs) be revamped. The SWGs should be empowered to spearhead sectors’ public hearings and reporting on sectors’ priorities and budget proposals. 2018 County Fiscal Strategy Paper 20 2018/19 Revenue Projections The Total resource envelope envisaged for the FY 2018/19 budget is Kshs 5.4 Billion. A total of Kshs 4.01 Billion is expected from the National government as equitable share. The projected Own Source Revenue stands at Kshs 300 Million. Table 6: Comparative Fiscal Framework for FY 2013/14-2017/18 ACTUAL ACTUAL BUDGETED BUDGETED PROPOSED PROJECTED SOURCE 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 Equitable 2,887,455,925 3,309,568,191 3,571,066,305 3,888,770,080 4,011,871,626 4,210,110,124 4,420,220,340 share Local 216,680,956 172,765,505 355,587,656 398,465,449 300,000,000 320,000,000 340,000,000 Revenue Conditional 50,376,504 222,995,845 238,344,028 290,499,973 290,500,000 300,000,000 305,000,000 Grants Developmen 12,400,000 245,901,101 359,389,189 400,000,000 400,000,000 t Partners Loans and 450,000,000 Grants Balance B/F 508,409,335 42,958,485 241,413,021 3,662,922,720 3,760,688,026 4,652,312,111 4,517,735,502 5,411,817,060 5,230,110,124 5,465,220,340 The county expects to receive Kshs 5 Million as compensation for user fee forgone and Kshs106 Million will be used under the Roads Maintenance and Fuel Levy Fund. Table 7: 2018/19 Resources Envelop by Type SOURCE OF REVENUE AMOUNT (Kshs.) Equitable share 4,011,871,626 Own-Source Revenue 300,000,000 4,311,871,626 Conditional Grants Compensation for user fee forgone 5,296,305 Rehabilitation of Youth Polytechnics 48,823,936 Road Maintenance &Fuel Levy Fund 106,648,770 Leasing of Medical Equipment 129,787,234 Loans and Grants 359,389,189 Other Loans and Grants 450,000,000 1,099,945,434 Total Resource Envelop 5,411,817,060 2018/19 Expenditure Projections Based on the county’s fiscal policy and in compliance with the fiscal responsibility principles outlined above in the PFM Act 2012, the county’s expenditure for the budget period in 2018/2019 is projected as follows: Recurrent Expenditure 2018 County Fiscal Strategy Paper 21 Recurrent expenditure is projected at 70% of total expenditure. This will however be spent to support capital expenditure in line with the programme based budgeting framework. This will go a long way in supporting robust economic growth in the County while ensuring prudence and caution in the application of resources. The County’s wage bill continues to exert undue pressure on the recurrent vote and this could undermine development if not mitigated. Restraining the growth of the county’s wage bill is a priority in the medium term in order to sustain growth. This will be achieved through the following measures: 1. Containing wages and salaries of public entities by limiting the size of the public service. 2. Carrying out a job evaluation exercise in the county. 3. Realigning the existing staff with the functions of the county government as entrenched in the constitution to avoid duplication of roles in the departments. Development Expenditure Development expenditure in 2018/2019 and the medium term is projected at 30% of total expenditure. This is consistent with the objective of progressively allocating more resources for critical capital projects. The projection is based on the assumption that there will be high absorption capacities for the spending agencies for development funds and that there will be continued implementation of the county government’s development agenda by investment in high impact initiatives and other projects as outlined in the CIDP. Summarized County Developmental Challenges The draft CIDP 2018-2022, has identified some key development challenges that continue to prevail and which lead to the high poverty levels that stand at 57%. Some of these major developmental challenges facing the county and which should be addressed include: 1. High levels of unemployment especially among the youthful and productive population that accounts for 70% of the total population. The unemployment is due to lack of technical and business skills, insufficient capital to venture into business, stringent conditions to accessing commercial credit, and lack of an entrepreneurial culture due to lack of information. 2. Low agricultural and livestock production and productivity due to low adoption of improved crop and livestock husbandry. 3. High levels of illiteracy levels compounded by the high levels of poverty faced by the community members continue to impede development. This requires additional funding for bursaries and scholarships. 4. Drought occasioned by Climate change has continued place a heavy strain on the county’s economy. Frequent failure of rains have affected food security situation in the county. An estimated 70,000 members of the community across the county continue to be supported through relief programmes. 5. Human-wildlife conflict is another challenge that is on the increase due to wildlife invading the farming areas in search of water and the effect are crop destruction and predation of livestock. There is also low awareness on the benefits that can accrue from the Tsavo ecosystem. 6. Poor road networks have increased the cost of doing business and therefore negatively impacted the competitiveness of local products. The poor roads have also made it very expense for the County Government to provide goods and services such as health, livestock and agriculture extension, and water services. 7. The health sector has been characterized by inadequate capacity in terms of staffing levels, inadequate health equipment, insufficient medical commodities, and a host of 2018 County Fiscal Strategy Paper 22 conditions such as the upsurge of Non-Communicable Diseases (NCDs), HIV/AIDS and alcohol and substance abuse. As a result; people incur high costs seeking health services in private hospitals in and outside the county and country. 8. Tenure on land, which is a key factor of production, is faced with many challenges. Most schemes have been finalized however the beneficiaries are yet to collect their titles. Some rural and urban areas are unplanned, making them unattractive to investors. The unclear land regimes, coupled with a growing population, have led to encroachment of water catchment areas, forests, biodiversity hotspots and wildlife areas. In the urban areas there has been growth of informal settlements and invasion of private and public lands. County’s Strategic Priorities for 2018/2019 and the medium term The County Government will implement its accelerated transformative agenda. Priority will be given towards projects with high impact for socio –economic development. The priority areas that will continue to be pursued in 2018/2019 and the medium term include: 1. Increasing access to clean, quality and potable water all households, schools and health facilities. 2. Improved food security and community resilience through provision of adequate water for irrigation, livestock and wildlife throughout the County. 3. Improved income and livelihood though value addition, marketing and establishment of fruits, tomatoes, beef and dairy processing plants. 4. Investing sufficiently in quality, accessible and affordable health care services including provision of prerequisite equipment, drugs and health personnel. 5. Ensuring quality education through development of ECDE and Library services, equipping of schools and enhanced bursaries allocation 6. Provision of quality infrastructure including improved roads network, ICT, quality housing and adoption of alternative sources of energy 7. Employment and wealth creation through provision of conducive environment necessary for the establishment of cottage and small and medium industries. 8. Preservation and promotion of Taita Taveta cultural heritage through establishment of cultural centres and branding of our culture and artefacts. 9. Environmental protection and conservation for sustainability and posterity. 10. Empowerment of Youth, women, and vulnerable members of the community through establishment of small scale cooperatives, talents identification and nurturing and improved access to cheap and affordable credit. 2018 County Fiscal Strategy Paper 23 CHAPTER FOUR: MEDIUM TERM EXPENDITURE ESTIMATES AND DEPARTMENTAL CEILINGS The sectoral allocation for the FY 2018/2019 and the medium term are influenced by the necessity to finance projects that directly support economic growth and reduce poverty. Attention will be given to projects that improve the quality of life of the residents in the county. The allocations are informed by the county goals and peoples aspirations as captured in the draft County Integrated Development Plan (CIDP) 2018-2022. Given that the sectoral demands for funds are very high while the available resources are limited it was important to come up with a fair way of distributing allocations. The following criterion has been used in the proposed 2018/2019 departmental allocations. 1. In the recurrent expenditure category non-discretionary expenditures/Statutory obligations such as salaries take first priority. 2. Citizens prioritization during the CIDP 2018-2022 and 2018 CFSP public participation forums. 3. Projects and programme with moderate costs implications but with high impact on transforming lives and employment creation 4. On-going and Critical infrastructure improvement projects 5. The baseline estimates also reflects the current departmental spending levels-Current absorption rates Details of Sectoral and Departmental Priorities and Baseline Ceilings Based on the resource envelop projected above and the broad county priorities, County departments have been allocated funds as discussed below and detailed in Annex 1. 1. ENVIRONMENTAL PROTECTION, WATER AND NATURAL RESOURCES SECTOR a. Water and Irrigation sub-sector During the FY 2018/19 and the medium term, the Strategic Priorities to be implemented for Water and Irrigation for include: 1. Increasing access to portable water in rural areas and urban centers 2. Provision of water for livestock 3. Promote water harvesting and modern irrigation methods 4. Secure and conserve water catchment areas 5. Management of storm water and convert it to useful water. In order to implement its prioritised programmes the department has been allocated a total of Kshs 410 Million accounting for 8 % of the total County budget. b. Lands, Environment and Natural Resources sub-sector The department’s mission is to provide an enabling Environment for the sustainable land, Environment and Natural Resource utilization through appropriate policy environment, effective support service, appropriate innovation, linkages and sustainable natural resources management for increased productivity social economic development and industrialization. 2018 County Fiscal Strategy Paper 24 The Lands, environment and natural resources subsector has been allocated a total of Kshs 179 Million accounting for 4% of the total county budget. 2. AGRICULTURE, RURAL AND URBAN DEVELOPMENT SECTOR a. Agriculture sub-sector The major goal of the department is to attain food and nutritional security. During the FY 2018/19 and the medium term, the department has lined up priority projects and programmes which include: Crops development, pests and diseases control, Promotion of Drought tolerant crops, revitalization of Horticultural Production Centres (HPC), Promotion of macadamia and avocado, sorghum and cotton development, Rice Production, milling and value addition, Strengthening extension services, Enhancing accessibility to affordable inputs and credit, promotion of banana value chain, Promotion of sustainable land use practises - Soil and water management, Soil fertility management, rehabilitation of gullies and protection of water catchment and wetlands, Rehabilitation of seed farms, Revitalization of agriculture mechanization services, Promotion of Agro – forestry, and Provision of Agriculture Development fund In order to implement these priorities the department has been allocated a total Kshs.205.6 Million representing 5% of the county budget. b. Livestock, Veterinary and Fisheries sub-sectors The department has lined up the following priorities and programmes for FY2018/19 and the medium term: 1. Promotions of livestock value addion ventures such as milk and leather processing. 2. Promotion of sustainable utilization of inland capture fisheries through: strengthening the BMUs; Control of fishing effort and strengthening of enforcement of fisheries legislations; 3. Range rehabilitation and water improvement for livestock in the ranches; 4. Maintenance of facilities at livestock multiplication centres in Bachuma and Mwatate 5. Maintenance and Improvement of facilities for livestock Holding Grounds; 6. Purchase of livestock feed milling equipment, Auction Rings and sale yards 7. Enhancing fish safety, quality assurance, value addition and marketing; 8. Promotion of appropriate fish handling and preservation technologies and Promotion of value addition and marketing of fish and fishery products. To implement these prioritised programmes, the department has been allocated a total of Kshs 168 Million accounting for 4% of the total county budget. 3. HEALTH SERVICES SECTOR Establishment of critical care Services at Moi County referral Hospital, equipping of all new health facilities and refurbishment of existing health centres are some of the priority programmes earmarked for FY 2018/2019. To implement these priority projects, the department has been allocated a total of Kshs 1.05 Billion accounting for 20% of the county budget. This amount excludes conditional grants from the National Government comprising of: compensation for user fees forgone; free maternal health care and leasing of medical equipment 2018 County Fiscal Strategy Paper 25 4. GENERAL ECONOMIC AND COMMERCIAL AFFAIRS TRADE, TOURISM AND COOPERATIVE DEVELOPMENT The department will continue to implement its core mandate by pursuing the following Strategic Priorities for 2018/2019. These include: Tourism promotion; Cooperatives Development; Trade and Markets Development. To implement these priority programmes, the department has been allocated a total of Kshs 220 Million accounting for 4% of the county budget. 5. EDUCATION AND LIBRARY SERVICES SECTOR The key priorities for FY 2018/2019 and the medium-term will include: 1. Promotion of access, retention and completion rates for secondary and tertiary institutions through enhancement of education fund to adequately address the demand for scholarships, loans and bursaries, mentorship and career guidance and Scholarship for specialised courses. 2. Strengthen early childhood education through Infrastructure improvement, staffing, grants, community sensitization, feeding program, growth monitoring, teaching/learning materials and graduation. 3. Increase enrolment in VTC through Rebranding, capitation grants, bursaries, infrastructure improvement, and employment of instructors, expansion on courses, increase of examination centres and community sensitization on vocational skills 4. Enhancing good performance in National examinations through provision meals and sanitary during examination period 5. Promote reading culture and access to reading materials through library infrastructure improvement, Mobile library services and community sensitization 6. Promote total child development through improved Childcare facilities To implement these prioritised programmes and projects the department has been allocated a total of Kshs 585 Million accounting for 12 % of the county budget. 6. ENERGY, INFRASTRUCTURE AND ICT SECTOR Public Works and infrastructure The department will implement the following priorities: 1. Improvement of existing roads network 2. New road formation 3. Improvement of housing 4. Provision of technical infrastructure These priorities will be implemented with a total allocation of Kshs 249 Million accounting for 5% of the county budget. This amount excludes conditional grants expected from the Roads Maintenance and Fuel Levy Fund(RMFLF) 7. PUBLIC ADMINISTRATION AND INTERGOVERNMENTAL RELATIONS SECTOR a. Public Service and Administration 2018 County Fiscal Strategy Paper 26 The department is planning to implement the following strategic priorities:- 1. Promote Public Participation in Decision-Making and Development Process 2. Promote Effective Service Delivery through well Coordination of service provision 3. The Promote peace, security and more resilient communities to disaster in the county 4. Human Resource managenent and Performance management system To undertake its prioritised projects/programmes, the department has been allocated a total of Kshs 267 Million accounting for 6 % of the county. b. Finance and Planning The department’s Strategic Priorities for 2018/19 and the medium term include: 1. Prudent financial management: through strengthening of controls; development of sound policies and laws; Automation of accounting and procurement processes, 2. Economic development Planning: through coordination of the preparation of County Intergrated Development Plan, County annual Development Plans and other planning and budgeting documents, 3. Resource Mobilization: Through automation of revenue management, Statistics and documentation: through strengthening of data collection and analysis; establishment of a statistics framework for the county 4. Monitoring and evaluation: Strengthen the continuous tracking of progress in the implementation of programmes To implement its mandate, the department has been allocated a total of Kshs 405 Million representing 7.7% of the county budget. The amount is inclusive of statutory obligations such as County staff mortgage, building insurance and county staff gratuity and County Emergency fund. c. Governor and Deputy Governor’s Office In 2018/2019 the major priority to be pursued will be provision of leadership and coordination of county government business. The office will also coordinate special programmes, service delivery and promote activities of County Budget and Economic Forum. To implement its priorities, the Gubernatorial has been allocated a total of Kshs 419 Million accounting for 8 % of the county budget. The amount includes Kshs 200 Million for the proposed construction of the Governors official residence. d. County Public Service Board (CPSB) In 2018/2019 the CPSB’s key priorities will be: 1. Promotion of Ethics and Discipline in the County Public service and the general; 2. Provision of human Resource Capacity to the County government and Provision of adequate administration services to the Board and its stakeholders. To implement its priorities, the Board has been allocated a total of Kshs 45 Million accounting for 1% of the county budget. 2018 County Fiscal Strategy Paper 27 e. County Assembly The assembly intends to undertake the construction of committee rooms and extra staff offices in an effort to create more space for conducting of committee meetings as well as accommodating staff as they perform their day to day operations. To implement its mandate effectively, the County assembly has been allocated a total of Kshs 760 Million accounting for 13 % of the county budget. The amount includes the 200 Million for the proposed construction of the speaker’s official residential 8. SOCIAL PROTECTION, RECREATION & CULTURE The sector covers of sports development, youth development, social development, and Culture Development. a) Vision: “A County where Social protection ignites the passion to participate and express pride in our cultural diversity, where our athletes perform honorably and consistently and where all residents are treated equally.” b) Mission: “To mobilize, sensitize and provide direction for all Taita Taveta citizens to participate in Community development and social affairs for recreation, good health, cohesion, competition, career development.” In FY 2018/19, the priorities for the sector include:  Sports promotion and development  Gender and Youth development and empowerement  Art and Culture development To execute its mandate, the sector has been allocated Ksh. 234 Million accounting for 5% of the total county budget. Risks to implementation of 2018/2019 priorities 1. The county has been facing Low local revenue collection which might persist in the medium term. This will however be mitigated through diverged strategies to increase revenue which include: exploiting new revenue streams, revamping revenue collection systems and civic education on the importance of paying rents and rates. 2. Unfavorable national and regional policies and agreements which allow free movement of goods within the region 3. The County governments have also not taken up some devolved functions like Gambling and Casinos and control of cultural activities. In case these functions are taken up, the County will prepare the necessary legislation and structure. 4. Irregular disbursement of funds from the National exchequer also poses a risk to the implementation of these priorities. This might also create other problems such as accruing pending bills. This will be mitigated by ensuring that departments come up with proper cash flow projections 2018 County Fiscal Strategy Paper 28 Annex 1: Proposed medium term departmental baseline Ceilings 2018/19 CFSP CEILINGS PROJECTIONS Wage Bill O and M % TOTAL DEPARTMENT WAGE BILL OPERATIONS DEVELOPMENT REVISED TOTAL DEV % 2019/20 2020/21 % % SHARE 1 County Assembly 3 19,083,741 240,916,259 200,000,000 7 60,000,000 15.4% 19.5% 10.0% 14.33% 798,000,000 837,900,000 2 Governor and Deputy Governor 100,291,679 9 4,538,674 225,000,000 419,830,353 4.8% 7.6% 11.3% 7.92% 440,821,871 462,862,964 3 County Public Service Board 36,921,791 8,078,209 - 45,000,000 1.8% 0.7% 0.0% 0.85% 4 7,250,000 49,612,500 4 Public Service and Administration 125,324,211 67,654,000 75,000,000 267,978,211 6.1% 5.5% 3.8% 5.05% 281,377,122 295,445,978 5 Health Services 628,626,982 1 06,716,088 315,147,030 1,050,490,100 30.4% 8.6% 15.8% 19.81% 1 ,103,014,605 1,158,165,335 6 Agriculture 88,966,178 3 3,231,434 83,540,014 205,737,626 4.3% 2.7% 4.2% 3.88% 216,024,507 226,825,733 7 Livestock & Fisheries 5 3,342,000 5 8,001,434 87,001,800 1 98,345,234 2.6% 4.7% 4.4% 3.74% 2 08,262,496 218,675,620 8 Lands, Environment and Natural Resources 92,100,000 2 2,100,000 68,210,000 182,410,000 4.4% 1.8% 3.4% 3.44% 1 91,530,500 201,107,025 9 Trade, Tourism and cooperative Development 6 8,337,567 4 1,897,432 110,000,000 2 20,234,999 3.3% 3.4% 5.5% 4.15% 231,246,749 242,809,086 10 Water & Irrigation 35,318,432 7 4,681,568 300,000,000 410,000,000 1.7% 6.0% 15.0% 7.73% 4 30,500,000 452,025,000 11 Youth, Gender, Sports and Culture 16,100,000 1 8,750,000 200,000,000 234,850,000 0.8% 1.5% 10.0% 4.43% 246,592,500 258,922,125 12 Education & Library Services 3 17,534,424 1 50,000,000 118,282,607 585,817,031 15.3% 12.1% 5.9% 11.05% 615,107,883 645,863,277 13 Public works& Infrastructure 51,080,425 18,000,000 180,000,000 2 49,080,425 2.5% 1.5% 9.0% 4.70% 261,534,447 274,611,169 14 Mining 5 ,000,000 5 3,124,777 10,000,000 68,124,777 0.2% 4.3% 0.5% 1.28% 71,531,016 75,107,567 15 Finance & Economic Planning 131,781,966 249,085,043 25,000,000 405,867,009 6.4% 20.1% 1.3% 7.65% 426,160,359 447,468,377 TOTAL 2,069,809,397 1 ,236,774,917 1,997,181,451 5,303,765,765 100.0% 100.0% 100.0% 100.00% 5,568,954,054 5,847,401,756 39% 23% 37.7% 2018 County Fiscal Strategy Paper 29 Annex 2: Own Source Revenue performance and Projections REVENUE TYPE DEPARTMENT 2017-18 TARGET 2017-18 1ST ACTUAL 1ST VARIANCE FY HALF HALF 2018/2019 YEARLY BUDGET TARGETS PERFORMANCE IMPOUNDING CHARGES ADM & DEVOLUTION 121,065 20,720 (39,813) 111,065 60,533 LIQUOR LICENCES ADM & DEVOLUTION 12,106,510 6,053,255 2,072,000 (3,981,255) 12,506,510 ADMINISTRATIVE SERVICE FEES ADM & DEVOLUTION 1,305,598 223,450 (429,349) 505,598 652,799 CLAMPING & DECLAMPING FEES ADM & DEVOLUTION 30,091 15,045 5,150 (9,895) 30,091 SISAL CESS AGRICULTURE, LIVESTOCK 8,776,197 4,388,099 1,502,025 (2,886,074) 8,976,197 & FISHERIES SLAUGHTER HOUSES AGRICULTURE, LIVESTOCK 5,123,823 2,561,912 876,930 (1,684,982) 5,123,823 ADMINISTRATION & FISHERIES LIVESTOCK AND VETERINARY AGRICULTURE, LIVESTOCK 2,998,289 1,499,145 513,150 (985,995) 2,998,289 & FISHERIES FISHERIES AGRICULTURE, LIVESTOCK 55,216 27,608 9,450 (18,158) 55,216 & FISHERIES SAND CESS ENVIRONMENT 6,262,548 3,131,274 1,071,820 (2,059,454) 6,262,548 ENVIRONMENT & REFUSE ENVIRONMENT 2,173,300 1,086,650 371,955 (714,695) 2,173,300 COLLECTION PUBLIC TOILET FEES ENVIRONMENT 4,368,160 2,184,080 747,600 (1,436,480) 4,368,160 NATURAL RESOURCES EXPLOITATION ENVIRONMENT 5,182,603 2,591,301 886,990 (1,704,311) 5,182,603 SALE OF TENDER DOCUMENTS FINANCE 5,843 2,921 1,000 (1,921) 5,843 GENERAL CESS FINANCE 40,885,735 20,442,868 6,997,495 (13,445,37 35,885,735 3) INTEREST & REVENUES FROM FINANCE 228,212 114,106 39,058 (75,048) 228,212 FINANCIAL INVESTMENTS OTHER LOCAL LEVIES FINANCE 397,756 198,878 68,075 (130,803) 397,756 2018 County Fiscal Strategy Paper 30 HEALTH-HOSPITALS HEALTH 26,935,711 13,467,856 4,609,982 (8,857,874) 26,935,711 PUBLIC HEALTH HEALTH 11,320,931 5,660,465 1,937,550 (3,722,915) 11,320,931 LAND RATES LANDS AND MINING 22,677,988 11,338,994 3,881,283 (7,457,711) 15,677,988 GROUND RENT LANDS AND MINING 20,801,625 10,400,813 3,560,148 (6,840,665) 20,801,625 RATES CLEARANCE CERTIFICATE LANDS AND MINING 29,215 14,607 5,000 (9,607) 29,215 PLOT TRANSFER FEES LANDS AND MINING 409,004 204,502 70,000 (134,502) 409,004 OPENING OF FILES LANDS AND MINING 11,686 5,843 2,000 (3,843) 11,686 PHYSICAL PLANNING LANDS AND MINING 568,398 284,199 97,280 (186,919) 568,398 MINING CESS LANDS AND MINING 11,932,070 5,966,035 2,042,145 (3,923,890) 12,932,070 BUS PARK FEES PUBLIC WORKS & HOUSING 20,369,612 10,184,806 3,486,210 (6,698,596) 18,369,612 MOTORCYCLE CURB PUBLIC WORKS & HOUSING 632,144 316,072 108,190 (207,882) 632,144 DAILY PARKING FEES(PARKING SLOTS) PUBLIC WORKS & HOUSING 13,619,415 6,809,707 2,330,930 (4,478,777) 8,619,415 RESERVED PARKING FEES PUBLIC WORKS & HOUSING 3,867,013 1,933,507 661,830 (1,271,677) 3,867,013 HOUSE RENT PUBLIC WORKS & HOUSING 24,037,055 12,018,527 4,113,884 (7,904,643) 15,037,055 HIRE OF COUNCIL'S EQUIPMENT PUBLIC WORKS & HOUSING 29,215 14,607 5,000 (9,607) 29,215 ADVERTISEMENT/PROMOTION PUBLIC WORKS & HOUSING 864,751 432,375 148,000 (284,375) 864,751 APPROVAL OF BUILDING PLANS PUBLIC WORKS & HOUSING 6,123,125 3,061,562 1,047,958 (2,013,604) 5,123,125 RENOVATION FEES PUBLIC WORKS & HOUSING 171,782 85,891 29,400 (56,491) 171,782 RENEWAL OF BUILDING PLANS PUBLIC WORKS & HOUSING 548,065 274,032 93,800 (180,232) 548,065 DRAWING PLANS FEES PUBLIC WORKS & HOUSING 88,812 44,406 15,200 (29,206) 88,812 PLOT FENCING FEES PUBLIC WORKS & HOUSING 292,146 146,073 50,000 (96,073) 292,146 BURIAL SITE FEES PUBLIC WORKS & HOUSING 155,421 77,711 26,600 (51,111) 155,421 TECHNICAL SERVICES FEES PUBLIC WORKS & HOUSING 927,562 463,781 158,750 (305,031) 927,562 SIGNBOARDS PUBLIC WORKS & HOUSING 3,485,296 1,742,648 596,500 (1,146,148) 2,485,296 APPLICATION FOR SBP/RENEWAL TRADE & COMM 11,292,008 5,646,004 1,932,600 (3,713,404) 10,292,008 HIRE OF TOWN HALL CHAMBERS TRADE & COMM 151,916 75,958 26,000 (49,958) 151,916 MARKET STALLS/SLABS TRADE & COMM 1,839,348 919,674 314,800 (604,874) 1,039,348 SOCIAL SERVICES TRADE & COMM 426,936 213,468 73,069 (140,399) 426,936 2018 County Fiscal Strategy Paper 31 SOCIAL PREMISES USE CHARGES TRADE & COMM 2,766,034 1,383,017 473,400 (909,617) 766,034 SINGLE BUSINESS PERMITS TRADE & COMM 21,803,369 10,901,684 3,731,594 (7,170,090) 20,803,369 HIRE OF STADIUM TRADE & COMM 181,130 90,565 31,000 (59,565) 181,130 MARKET FEES TRADE & COMM 45,645,855 22,822,927 6,780,914 (16,042,01 35,645,855 3) GRAND TOTAL 338,000,000 169,000,000 57,847,885 300,015,583 2018 County Fiscal Strategy Paper 32