The Evolution of AI In Local Governments

The Evolving Role of AI in Local Government: Opportunities and Challenges

We’re approaching AI in local government with cautious optimism. Rather than seeing it as a "revolution," we’re thinking of it as more of an evolution—a steady, intentional growth where governments adopt new technologies at a pace that aligns with their needs. This approach makes for a smoother, more sustainable integration of AI tools.

In our 2025 GovTech report, we highlighted AI as one of the top trends reshaping public sector IT, alongside ERP updates and broader digital transformation efforts. With AI, local governments can streamline decision-making, improve public services, and boost efficiency. From automating routine tasks to delivering real-time data for policy decisions, AI opens up new ways to enhance services and respond to community needs.

Navigating this evolution thoughtfully is essential, especially given the unique challenges local governments face, like privacy, policy development, and managing vendor relationships. Key steps like securing data, preventing “shadow AI,” and building solid policies will ensure AI adoption is effective and ethical.

If you haven’t yet explored our GovTech report, we invite you to check it out. It’s packed with valuable insights and data on the trends shaping the public sector today.

The GovAI Coalition: Setting AI Best Practices in Government

A key part of our AI efforts is our work with the GovAI Coalition—a collaborative initiative led by the City of San Jose.  The Coalition brings together over 300 public sector agencies and tech vendors. The mission is both straightforward and ambitious: to set best practices for using AI in government.

The GovAI Coalition offers a vital space for local governments and technology providers to connect and share insights. With AI evolving so quickly, it’s more important than ever for public agencies to stay informed, proactive, and ready to integrate these technologies in ways that are both effective and secure.

Avero has been actively involved in the coalition’s meetings, adding our voice to important discussions on AI policy development and risk management.

Why the AI Coalition Matters in the Public Sector

But what makes these AI coalitions so important for the public sector? Let’s break it down.

1. Making Services Faster and Friendlier

Picture needing help with a government form late at night—no one’s around, right? But with AI-powered chatbots, answers are available 24/7, saving citizens time and reducing frustration. It also means government employees can focus on bigger tasks instead of fielding routine questions. With AI, services are faster and more accessible, giving us help when we need it.

2. Helping Governments Make Smarter Decisions

AI isn’t just answering questions; it’s also supporting smarter, data-driven decisions. By analyzing massive datasets, AI helps policymakers see where resources are needed most. Whether it’s budgeting or planning community projects, AI guides more targeted, efficient decisions that aim for a bigger impact.

3. Saving Taxpayer Dollars

Here’s a big one: cost savings. By automating repetitive tasks, AI could free up around 30% of government workers’ time. That means potentially saving billions each year—an opportunity for governments to cut costs without sacrificing quality.

4. Tackling Big Issues Like Climate and Healthcare

Think about complex challenges like climate change or healthcare. AI is helping here, too. In healthcare, for example, AI aids in early disease detection, while smart city projects use it to manage traffic and monitor air quality. Beyond streamlining services, AI partnerships are taking on challenges that affect us all.

5. Fueling Innovation through Public-Private Partnerships

When the public sector partners with private tech companies, it brings new ideas and resources to government projects. These collaborations spark innovation, helping develop solutions faster and with fresh perspectives. The result? New and improved services that benefit everyone.

6. Building Transparency and Accountability

AI doesn’t just improve services; it also increases transparency. Real-time insights from AI can provide a clearer view of government operations. For citizens, that means more visibility and accountability, which goes a long way toward building trust.

7. Closing Skill Gaps in the Public Sector

Tech evolves quickly, and not everyone has the skills to keep up. By working with AI experts, government agencies can ensure their teams are ready to work with this technology, using it effectively to serve the public.

8. Setting Standards for Responsible AI

Nobody wants a free-for-all with AI in government. Organizations like the Coalition for Health AI are creating frameworks and best practices, especially in sensitive areas like healthcare. These standards make AI more predictable and reliable for everyone—agencies, developers, and citizens alike.

9. Bridging Regulatory Gaps and Building Trust

With all the excitement around AI, there’s also caution. How can we be sure AI in government is safe, ethical, and respects privacy? Coalitions are developing guidelines for responsible AI use, addressing ethical and regulatory concerns to earn public trust and set a safer AI future.

10. It’s All About Modernization

From helping governments make better decisions to tackling big societal issues, AI collaborations are key to modernization. They’re enabling governments to work smarter, not harder, and giving citizens faster, more responsive services.

In short, AI coalitions in the public sector aren’t just partnerships—they’re the backbone of a more efficient, transparent, and effective government.

Key Concerns with AI in Local Government

In our coalition work and one-on-one consultations with local governments, we’ve noticed some common concerns around AI. These challenges really underscore how crucial it is to have proactive policies and open, clear communication between agencies and vendors.

Key Risks of AI in Local Government

1. Shadow AI One big concern is something we call “Shadow AI.” This happens when vendors update their software with new AI features without giving agencies a heads-up. Imagine a local government suddenly finding out an AI system has started making key decisions on its behalf—without their full knowledge or approval. That’s Shadow AI. To tackle this, many agencies are setting up policies requiring vendors to disclose any AI features in their software and clarify how they use data. With clear guidelines in place, governments can better manage the risks and opportunities AI brings.
2. Data Privacy Concerns Data privacy is another top issue. Sometimes, local governments unknowingly agree to terms that allow vendors to use their data to train future AI models, potentially exposing sensitive information and breaking trust with the public. In our work with the GovAI Coalition, we’re pushing agencies to look closely at vendor contracts to fully understand how their data will be used. We’re also advocating for stronger data governance practices to safeguard public information.
3. Vendor Relationships and Compliance Managing vendor relationships can be tricky. Vendors are essential for bringing in AI solutions, but they also hold a lot of influence over how AI gets implemented. Balancing innovation and regulation isn’t always easy. As part of the GovAI Coalition, we’ve helped set standards for vendor communication and collaboration with public agencies. Vendors often attend coalition meetings as observers and have the chance to showcase their AI products when it fits the discussion. This helps local governments see what’s out there and find solutions that meet their specific needs.

Building Stronger AI Policies for Local Governments

One of the biggest wins from the GovAI Coalition has been developing modular policy templates. These templates give local governments a strong starting point for adopting AI, but they’re not a rigid “one-size-fits-all” solution. Instead, they’re designed to be flexible so each agency can customize them based on their AI readiness. This flexibility allows municipalities to keep pace with AI as it evolves, always staying aligned with best practices and the latest advancements.

For instance, a city with advanced IT infrastructure and a tech-savvy team might be ready to roll out more ambitious AI policies from day one. They can use these templates to create detailed guidelines for AI integration, governance, and oversight, supporting more complex implementations. Meanwhile, smaller towns or cities with limited tech resources might begin with simpler policies. They could start by automating basic tasks and then expand their AI policies over time as they build capacity and get more comfortable with the technology.

The idea behind these modular templates is to make sure every local government—big or small—has the tools they need to handle AI responsibly. By allowing each agency to adapt the policies to fit their needs, the GovAI Coalition is helping ensure that no one gets left behind as AI reshapes how we govern. This approach promotes sustainable AI adoption, encouraging innovation while building public trust and accountability.

Real AI Use Cases in Local Government

Local governments are already seeing the benefits of AI, especially in 311 services, which handle non-emergency calls for things like street repairs. With AI-powered systems, these centers can manage higher volumes of requests, automating routine questions and freeing up staff to tackle more complex issues. This has been a huge help during staffing shortages, leading to faster responses and better public service.

AI is also making a difference in traffic management. By analyzing live data from cameras and sensors, it can optimize traffic flow, cut down congestion, and boost safety. In public safety, law enforcement is using AI to predict crime patterns, which helps them allocate resources more effectively, speed up response times, and improve community safety.

On the budgeting side, AI is helping local governments allocate resources more strategically. By analyzing data across departments, it can spot inefficiencies and recommend smarter ways to use funds. These real-world examples show that AI is already making local government operations more efficient and responsive to community needs.

The Future of AI in Local Government

We believe AI has the power to transform local government by giving officials smarter tools and data-driven insights. With AI, routine tasks can be automated, resources can be used more effectively, and decisions can be made with greater impact, all helping governments serve their communities better.

The future of AI in government relies on thoughtful, proactive adoption. Initiatives like the GovAI Coalition are essential, creating space for governments and vendors to work together to ensure AI is both ethical and effective.

As AI continues to evolve, we’re here to help local governments navigate this new landscape, making sure they benefit from AI while managing its challenges. Avero Advisers is ready to show you how AI can support your local government.

We hope you found this information helpful. If you have any feedback or questions or just want to chat about potential optimization strategies, please reach out to us at info@averoadvisors.com or message us on social media. Our mission is to provide more transparency and access to public sector technology, so we invite you to follow us on social media, LinkedIn, and YouTube and listen to our weekly podcasts for daily Govtech thought leadership.

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