Local governments are demanding a constitutional amendment to reserve 38 per cent of the national budget for their funding.
The proposal is part of recommendations made at the last week’s ninth review of the decentralisation policy two decades after inception.
Stakeholders have resolved that a cabinet paper and a Bill be submitted, setting a minimum percentage of the national budget to be reserved for local governments’ funding.
The Ministry of Local Government was tasked to lead the effort with implementation in the next financial year.
“Local government funding has declined from 25 per cent in the FY 2003/4 to 15 per cent in FY 2013/4 of the national budget. This is a challenge for local governments that generally have weak revenue bases, making it difficult for them to effectively deliver services,” stakeholders said.
The report also recommended that all unspent funds should be returned to the general collection account at the end of the financial year for re-appropriation.
However, when contacted for a comment, Mr Keith Muhakanizi, the Secretary to the Treasury, said the proposals, if effected, would lead to “disaster.”
“There is need for flexibility in budgeting for the nation but when you begin tying hands of government, this is not possible,” Mr Muhakanizi said.
“Now you have Karuma (hydro power plant construction), when that is finished, funds can be released to another project but if you tie the hands of the government, that may not be possible,” he added.
But stakeholders said funds devolved to the local government should come as direct grants instead of conditional grants tied to specific expenditure as they cannot address pressing priorities.
But Mr Muhakanizi said this would create indiscipline and abuse.
“As you have already seen with salaries, I hear some people get the money and keep it in the bank to accumulate some interest. We cannot allow this and I am following them.
Retaining unspent funds will promote inefficiency once these people are not kept on pressure for accountability,” Mr Muhakanizi said.