This is a proposed law that reveals how revenues raised from taxes and fines are spent in a fiscal year by ministries and other agencies and details expenditure area such as wages and salaries, travel, hospitality, renovations and purchase of goods and services.

The Appropriation Bill, once approved by Parliament and the President, forms the basis for withdrawal of funds from the government’s main accounts or the Consolidated Fund for State operations.

The Appropriation Bill, which is now 2024 Appropriation Act after President William Ruto assented to the proposed law, will guide spending for the financial year that started on Monday or July 1 to June 30, 2025.

Why does the bill matter?

Without the Appropriation Bill, the government would not be able to spend a significant share of the previous year’s spending plan because the proposed law required withdrawing funds from the government’s main account. For instance, the government would only spend up to 50 percent of its previously approved budget in the absence of a new Appropriation Act.

What is the relationship between Appropriation Bill and Finance Bill?

 The Appropriation Bill details areas of spending or the budget while the Finance Bill highlights new tax/revenue raising measures for each near fiscal year. While different, the two bills are tied at the hip as they are expected to be tabled together in Parliament and form the critical part of the annual budget statement presented by the National Treasury Cabinet Secretary every June.

Both bills also earned a new similarity this year as Kenyans protested new taxes while at the same time demanding a recalibration of spending to eliminate wasteful expenditures.

Why did President sign the Appropriation Bill into law amid public concerns over State spending?

Last week, President William Ruto assented to the Appropriation Bill, allowing the drawing of funds from government accounts for use in accordance to the approved spending plans by the National Assembly. He has, however, attempted to appease public concerns by authorising Treasury to work on spending cuts equivalent to Sh346 billion to cover the hole created by the expected withdrawal of the Finance Bill which contained new revenue raising measures.

 President Ruto says cuts will cover his office including a slash on travel, hospitality and renovation budgets while the Treasury is expected to work with Parliament, the Judiciary and devolved units to cut discretionary spending to achieve deep budget cuts.

What would have happened if President Ruto refused to sign the Appropriation Bill?

Just like he refused to sign the 2024 Finance Bill following deadly protests, President Ruto would have equally rejected the Appropriation bill by writing to Parliament and instructing MPs to delete all clauses to the legislation as has been the case with proposed tax/revenue raising measures.

 Unlike the Finance Bill where the State can rely on existing tax measures, the absence of a new Appropriation Act would have seen the government resort to a backup measure to access funding to support about 50 percent of the most recent approved spending plan.

The government would then reconstitute a new Appropriation Bill capturing changes to its spending plan to unlock full access to State accounts.

How does withdrawal of Financing Bill and signing of Appropriations Bill into law affect counties?

The Appropriation Bill is closely tied to the Division of Revenue Bill (Dora) which splits spending between the national and county governments. President William Ruto has proposed changes to the bill to capture expected spending cuts as the State rationalised spending across both levels of government.

Reverting Dora to Parliament means Counties are likely to face delays in receiving the first disbursements from the national government covering the 2024/25 financial year.

 Like the Appropriation Bill, Dora holds the key to releasing funds to the 47 devolved units.

What happens to the Appropriation Act after the withdrawal of Finance Bill 2024?

 The Treasury is expected to work with three arms of government to identify areas of discretionary spending which will either be withdrawn completely or trimmed with the goal of delivering at least Sh346 billion in lower expenditures for the 2024/25 financial year.

The proposed cuts will then be presented to Parliament and passed as the first supplementary budget estimates and will result in the Appropriation (Amendment) Bill no.1 of 2024 to be assented to by the President.

 Before that, Parliament upon the resumption of regular sittings on July 26 will consider the proposed changes to the Division of Revenue Act which will in effect lower the counties equitable share from Sh401 billion at present.

 The Appropriation (Amendment) Bill will form the basis for the revised 2024/25 government spending plan and will accommodate the Sh346 billion expected budget cuts.