Effects of Revenue Collection on the Relationship between Deficit Budget Financing and Operational Performance of Kisii County Government, Kenya

Abstract

Revenue generation is becoming a source of government finance for service delivery to its citizenry; most governments however oftenly face budget deficits and rarely achieve balanced budgets. In the budget report Financial Year 2014/15, the Kisii County government projected public expenditure of Kshs.7.7 billion, with allocation from central government of Kshs.6.1 billion, but still it faced a deficit budget which was hard to fill regardless of revenue streams. The objectives that guided the study  were: to determine the effect of single business permits revenue on the relationship between deficit budget financing and operational performance, evaluate the effects of land rates revenue on the relationship between deficit budget financing and operational performance, establish the effect of property rates revenue on the relationship between deficit budget financing and operational  performance, find out liquor licensing revenue on the relationship between deficit budget financing and operational performance in Kisii County Government, Kenya.  The study used descriptive case research design. The target population was 260 respondents. Stratified random sampling design was used to select respondents and the primary data was collected using a questionnaire and secondary data was obtained from two fiscal years; FY2013/14 and FY 2014/15 time series streams of revenue for 12 months.  The study used percentiles and regression analysis to analyze the results. Findings include: the coefficient of determination r²  was 0.605; this implied that Single Business Permit Revenue, Land Rates Revenue, Property Rates Revenue, Liquor Rates Revenue explain upto 60.5% the effect of variations in operational performance of Kisii County Government.  The model Y = 1.458 +0.181X₁ + 0.476X₂ + 0.073X₃+ 0.243X₄ ; the regression analysis results showed  effect of the four factors on the relationship between Deficit financing and performance of Kisii County Government at 95% confidence level was statistically significant (p values < 0.05). the study concluded that Single Business Permit Revenue, Land Rates Revenue, Property Rates Revenue, Liquor Rates Revenue statistically and significantly influence the relationship between budget deficit financing and performance of Kisii County Government.

Keywords: Kisii County, Budget deficits, Revenue, Operational Performance, Service delivery