Treasury is appealing to parliament to review the division of revenue act and reduce allocation to counties by 17 billion shillings.
It is proposing that the allocation be adjusted downwards from 302 billion shillings to 285 billion shillings.
Treasury Cabinet Secretary Henry Rotich told senators the government has suffered a revenue shortfall of 84 billion shillings compelling it to cut expenditure.
Barely three months to the end of this financial year, has only 134 billion shillings out of 302 billion shillings allocated to counties been disbursed.
Some counties indeed have received as little as 30 per cent of their allocated share, consequently slowing down operations.
Treasury cabinet secretary Henry Rotich appeared before the senate’s finance and budget committee to explain reasons for the delays.
But treasury wants parliament to review and amend the division of revenue act by reducing the county allocation share.
Rotich told senators that the revenue collected in the last half financial year was inadequate to sustain the budget compelling the government to cut on expenditure.
Treasury attributes the revenue shortfall to the long electioneering period which made business environment unconducive senators however, registered their protest against the idea of reducing county funds and asked the treasury to engage the Kenya revenue authority on addressing the revenue deficit.
The senators also grilled the Treasury bosses on disparities in disbursement of funds to counties with some having received 57 per cent of their allocation while others 33 per cent.
With only 42 per cent of county funds disbursed three months to end of financial year, treasury wants county governments to also prepare supplementary appropriations bill to cut on expenditure.