The National Treasury is staring at a fresh confrontation with county governments after failing to disburse the constitutionally mandated monthly cash allocations for July, raising fears of a crippling cash crunch at the devolved units.

The delayed transfers have sparked alarm among governors who say they are unable to pay workers, meet essential service obligations and settle mounting supplier bills as the standoff threatens to snowball into a full blown crisis with the Council of Governors.

According to multiple county officials, Nairobi has only issued verbal assurances that the cash will be released soon but has yet to give concrete dates.

The governors argue that the delay puts critical sectors such as health, agriculture and early childhood education at imminent risk just weeks into the new financial year.

They further caution that continued failure by Treasury to meet its obligations could prompt legal action or trigger a coordinated pushback from the powerful Council of Governors.

Treasury has cited revenue shortfalls and competing national priorities as contributing factors to the delay.

The cash crunch comes at a time when counties are already grappling with pending bills running into billions and wage demands from workers threatening industrial action.

Some governors have warned that hospitals could run short of essential drugs and medical supplies if the funds are not released urgently. Others say devolved functions like water services and road maintenance risk grinding to a halt due to lack of operating funds.

Governors accuse Treasury of undermining devolution by depriving counties of timely funding, warning that unless the allocations are released, the situation could deteriorate quickly into a political and administrative standoff.

As pressure mounts, the Treasury faces growing calls to honour disbursement schedules and avert a confrontation with the Council of Governors which could disrupt service delivery across the country.