AI in state and local government: Use cases, risks, and best practices

Artificial intelligence (AI) is increasingly used in state and local government to improve efficiency, automate processes, and enhance resident services. Common use cases include communications, document processing, and chatbots. However, successful implementation requires human oversight, strong data foundations, and workforce training.

AI in state and local government: Key trends and insights

State and local governments are increasingly leveraging artificial intelligence (AI) to enhance public services and improve efficiency. For the first time in two decades, AI hit the number one spot on the NASCIO Top 10, reflecting the technology’s potential to address numerous challenges that state and local governments face.

How AI is being used in government 

Across state and local agencies, AI adoption is taking shape in practical, incremental ways. Teams are using AI to handle high-volume communication tasks, like drafting responses to common resident inquiries or generating social media content. Others are using it to summarize lengthy documents, helping staff quickly extract key information from reports, policies, or meeting notes.

Internally, AI is also becoming a tool for knowledge access. Instead of navigating multiple systems, employees can use AI to surface relevant policies or procedures more efficiently, reducing time spent searching for information.

So far, AI has made the most impact when it supports work that is repetitive, time-consuming, and structured. These use cases are gaining traction because they address a consistent challenge in government: doing more with limited time and staff.

AI adoption in government: What the data shows

In 2025, 40% of public sector leaders were in the evaluation and implementation stage for AI tools, either back-office or resident-facing. And by 2026, many of the respondents in our survey of government leaders reported that they’re already using AI, and 72% expect to expand their use of AI in the next 12-18 months.

This rapid move to leverage AI makes sense: Looking back at our 2024 report, we found that most government leaders were optimistic about AI — with 89% of respondents expressing that AI has the potential to improve operations in state and local government over the next 5 years.

This mirrors other studies:

• The 2024 Digital Cities Survey from the Center for Digital Government found that almost half (44%) of responding cities have chatbots today, and another 44% say they’re coming soon. 
• A poll of state leaders by the National Association of State IT Directors (NASTD) reported that nearly half of responding states are using AI for chatbots, and resident portals were cited second as a future use case; over half had already implemented AI for administrative processes and cybersecurity.

This year, government respondents remained overwhelmingly positive about the impact of the AI investments they have made thus far — especially when it comes to the efficiency of back-office AI investments. Over 90% of leaders said there has been a positive or very positive impact. 

Why AI training is critical for the government workforce 

Without targeted training, agencies risk limiting the impact of their AI investments. Employees may lack confidence in using new tools, leading to inconsistent results or underutilization. At the same time, rapid technological change is reshaping job expectations, making ongoing learning essential.

Leading agencies are addressing this challenge with more structured approaches to upskilling. This includes identifying specific skill gaps through workforce assessments, partnering with universities and private-sector experts for training, and creating support systems like mentorship programs and peer learning groups.

Real-world examples of AI in state and local government in the U.S.

Government agencies are already leveraging AI to simplify operations and improve resident interactions. Here are a few ways that state and local agencies are using AI — striking a balance between innovation, maintaining public trust, and delivering real benefits to staff and residents:

1. Simplify property assessments
   
   Amelia Powers Gardner, County Commissioner of Utah County, Utah, said that in her county, the assessor’s office is using AI to identify anomalies in property value assessments and double-check outliers, helping to ensure accuracy.
   
   And counties like Ventura and Riverside in California and Stark County, Ohio, are using AI for property appraisal. Using AI in models has significantly improved appraisal accuracy and efficiency. For instance, in Ventura County, the AI system helped realize a 42%-point improvement in accuracy and reduced data sanitization time from four days to just one hour.
   
2. Speed up document processing and transcription
   
   State and local agencies are adopting AI-powered document processing tools to automate workflows like data classification and extraction. The ability to understand document contents in mere seconds is helping staff improve their workflow and decision-making processes.
   
   AI tools can transcribe historical handwritten documents, making them accessible to researchers and the public. Jonathan Feldman, CIO of Wake County, North Carolina, has started using AI for transcription. He pointed to a transparency initiative in his area that is transcribing works such as the Enslaved Persons Project and the Restrictive Racial Covenant Project as real-world examples.
   
3. Increase engagement with resident-facing chatbots
   
   For state and local governments, chatbots are one of the most popular ways to use AI. Chatbots can guide users through payment plans, registrations, and appointment scheduling, improving customer service and reducing staff workload. And as Amelia Powers Gardner pointed out, AI-powered chatbots allow more residents to communicate with the government during emergencies.
   
   Recently, with the hopes of increasing resident engagement and transparency in local government finances, researchers developed GRASP (Generation with Retrieval and Action System for Prompts), an AI chatbot framework designed to assist residents in understanding municipal budgets. The chatbot gives accurate responses to budget-related questions to help the public better understand their town’s budget.
   
4. Monitor utility and transit infrastructure in real-time
   
   Atlanta has put AI technology to work, detecting leaks in its water infrastructure. By implementing AI solutions (guided by a dedicated committee), the city aims to address water system issues more efficiently, ensuring better resource management and service delivery.
   
   Similarly, Philadelphia has implemented AI-enabled cameras on school buses and public transit to detect traffic violations, such as drivers failing to stop for school buses with extended stop arms. The goal is to improve public safety and reduce congestion-related delays — and cut down on related operational costs.

A practical example: Using custom GPTs to support government communication

One way agencies are beginning to operationalize AI is through custom GPTs designed for specific tasks, like public-sector communications.

Instead of relying on generic outputs, these tools can be configured to reflect an agency’s voice, terminology, and communication standards. For example, a custom GPT can be guided to produce content that aligns with accessibility requirements, avoids jargon, and follows approved messaging. Used in this way, tools like custom GPTs become an extension of staff capacity, not a replacement for it.

Want to try an AI prompt before diving into custom GPTs? Find ready-to-use AI prompts here: High-Impact Resident Communication: The Definitive Guide 

What are the limitations of AI in digital government services?

Government work is rarely just about completing tasks. It’s about making decisions that affect people’s lives, often in situations that require context, judgment, and accountability. AI underperforms in areas that require things like intuition and cultural sensitivity: 

Ethical decision-making 
AI lacks the moral compass inherent to human judgment. In scenarios requiring ethical considerations, such as social services or law enforcement, relying solely on AI can lead to unfair outcomes. Studies have shown that algorithmic decisions can reinforce existing social inequalities. Similarly, the misuse of AI in legal settings has raised concerns about undermining the integrity of the justice system.

Data bias and representation
AI systems are only as good as the data they’re trained on. If the training data contains biases or lacks representation from certain groups, the AI’s outputs will reflect these shortcomings, potentially leading to discriminatory practices.

Emotional intelligence
Without lived experience to learn from, AI tools lack the ability to pick up nuanced emotions. Humans can imagine, judge shifts in a situation or conversation, and anticipate — abilities that are unique to people. 

What’s the biggest barrier to AI adoption in government?

When it comes to AI deployment in government, there’s been enthusiasm from leaders but patchy progress. Although present in many government solutions, AI is often constrained by unclear permissions and legacy infrastructure. 

Legacy SORs still power core government functions, from licensing to public assistance to revenue collection. But these systems were built for recordkeeping — not real-time data exchange or advanced analytics. As a result, data access, consolidation, and accuracy remain persistent challenges.

Without accurate, structured data, agencies cannot move toward advanced use of AI. 

A collaboration between humans and AI is the future of public sector work

Artificial intelligence will lead to a new way of working, but this isn’t a zero-sum situation. While AI offers promising tools for enhancing public sector efficiency, it does have significant limitations.

Right now, AI is unlikely to replace hands-on roles, positions that require a high level of personal interaction, and jobs in less predictable environments. Traits like creativity, imagination, and empathy can’t be replicated by a machine; yet, they’re all necessary for people working in the public sector.

Digital government transformation faces a big challenge: update legacy technology enough to take full advantage of AI capabilities and balance that technology with human judgment — integrating the new technologies ambitiously and strategically into the organization while upholding public trust and ethical standards.