Tech Trends Transforming
Digital Government

Hello and welcome. Happy new year. It’s hard to believe it, but 2026 is already well underway. We are delighted to have you all here for our 2026 predictions webinar, the tech trends that are transforming government and are going to really have an impact this year. My name is Kelly Davis-Felner. I’m the chief marketing officer here at PayIt. And I have with me six really wonderful guests. Our first one is Dustin Haisler who is the chief AI officer and US general manager for Darwin AI. We have Kim Archuletta who is the treasurer and public trustee of Pueblo County, Colorado. We’ve got Andy Schor who is the mayor of Lansing, Michigan. And then we have a few PayIt folks as well. We’ve got John Thomson, our founder and CEO. Tom Nieto, our chief operating officer and president. And then finally, our head of product, Adam Christensen. I am so thrilled. These folks have wonderful insights to share and some really, really interesting observations and predictions about what lies ahead in 2026. So with that, let’s get started. So tell us, what do you think the biggest tech-related challenge governments are going to face in 2026 will be?

There’s going to be quite a few things that are starting to hit government. And I mean, there’s no shortage of conversation around AI. Heck, it’s in my title. The challenge here is I think we’re starting to see more consumer use of AI that’s impacting government transactional systems, right? When people look up information, they’re starting to leverage standard consumer language models. They’re not always going to a government website. And this is kind of pushing agencies into this interesting corner as we start to think about what’s your strategy? How do you interface back? I think from a regulatory standpoint, you’re going to see a lot of regulations emerge with states that go into session in 2026. So, we saw this with AI last year, over 100 pieces of legislation that were passed related to AI. But it’s not just about AI. You’re going to see things like data, data ownership, data management, things that touch on some of the more emerging use cases of AI like facial recognition and bias and ethics and all these things are coming their way towards state and local government. I think, you know, outside of that, you got the standard stuff, right? Agencies still have technical debt. They’re trying to mitigate and balance. There’s still workforce constraints. We just got back to kind of pre-pandemic levels. But we have all this new stuff that’s coming and now agencies have to figure out how do I actually deal with this? Like what’s my strategy for this? How do I find the right talent in order to deal with these issues? I think data is going to be a big piece of all this as well. I mean, people are very quickly realizing bad data in, bad data out. So, if you don’t have a good data strategy, ultimately you don’t have a good AI strategy. Cybersecurity continues to evolve and then I think you know the one thing that is out there that most people don’t talk about is also the behavioral aspects of what’s happening meaning that constituents use of technology is driving and kind of reconditioning them on what they expect from government and so we’re starting to see rapid behavior changes and new expectations that are emerging that we don’t have years to prepare for in the public sector people are demanding it now if not they’re going to use it or they might vibe code it into existence.

So I think the biggest challenge that governments will face when it comes to technology is budget constraints. So, I think budget constraints as well as mandates that specific states hand down. In the state of Colorado, sometimes we get mandated with things that have to be there. And that falls directly on each county. And so with those budget constraints, that can pose a huge problem. And I would also just say procurement processes. To make sure that you are following your local government’s procurement process, whether that be putting out an RFP or just making sure that your vendor knows that process as well. So budget constraints is definitely as always the biggest constraint when you’re wanting to integrate technology.

It feels like there’s a lot of dynamism and change happening in modernization. So like what feels different about how governments are approaching technology compared to just a few years ago even?

Yeah. When I think about what’ll be different and exciting for 26 for our government partners, boy, I think there are a lot of things that are really interesting. It’s such a good time to be in technology in government service and partner with really forward-thinking you know governments at all levels and I think a lot of it is really benefit around focus and sort of the opportunity that presents itself with the rising expectations of constituents and sort of the consumerization of all the services or to take friction out as we talk a lot about and I think there are increasingly more partners that are offering more modern, more modular, more services-oriented approaches, cloud-native, platform-oriented approaches to solving some of these problems together versus historically it’s been really monolithic old tech that has really made quote unquote modernization expensive, risky, slow, and not all that modern. And so I think this is a really exciting time as more platforms continue to emerge that really de-risk modernization and then really deliver on the promise of modern software being applied to the mission of government. And so I think the continuation or the acceleration of that trend really powerful in 26.

Okay, you know, we can’t have a webinar without talking about artificial intelligence. I know it’s on everybody’s mind in the audience as well. So, let’s do some real talk. Where are you seeing AI create real practical value or expecting that to emerge this year in government agencies?

There are three use cases that in my opinion will be most impactful this coming year. Number one is document verification. And I think one of the most powerful things about this one is that there are benefits to unlock on the resident side as well as on the agency side. So this one has a lot of power behind it. So what it will do is it will continue the trend of digitization of various types of workflows that residents have traditionally had to take a physical document into an office and have somebody manually review those and sometimes scan and upload into their own systems and it takes time and it creates lines. So in this case this use case I love it because residents in their own home can upload documents and AI can assess those and say hey is this the right document? Does it have the right information that we need to say validate your residency in a certain location?
There’s plenty of these types of use cases, but a resident can upload and then the agency can decide hey look, this AI model is good enough to validate instead of having us have to review. And it can save people time in lines. It can save really someone from making a trip at all. So I love document verification and this space has come extremely far in terms of being able to say, “Yeah, that’s the right utility bill or other form of proof that we need to then get you going on the rest of what we’re trying to help you accomplish with our government agency.” So that’s number one. I got two more. Number two is on the resident side. I think sometimes residents don’t know where to go to get something done. How do I even start? And I think AI is a tremendously powerful engine to help just guide and sometimes give a warm handoff to residents in terms of where do I even go? How do I start? What’s the process by which I can go get something done? Sometimes it takes multiple government agencies. Sometimes it’s just trying to find the right one. But just being that router of where to send a resident to get something done, I think is really number two. And the third one is really particularly on the operational side in agencies and that is how can they make better use of their data. I think right now there’s a continual trend toward I need this report, I need this report, I need this report. AI has the power and really capability to have an agency say, “Tell me what’s going on here,” or, “How much tax have we collected so far this year, or how many residents are in this particular zip code that have this set of conditions?” and really to find and jump to really a question and answer with the data as opposed to well I need a report. You wait for it to be built and then you end up having to filter and filter and filter to get the answers you want. And I think that has the power to really help agencies to be less mired in reports and more mired in, hey, what am I trying to accomplish and what questions and answers do I need to get my jobs done?

Yeah, I think it’s a great question because you know oftentimes I get asked like what are the killer use cases of AI because it’s very difficult and sometimes the strategy is well we did a survey and we asked people what they’re doing that added value. I think you’re going to see a lot of different things. You know, on the front end side, I think the market’s going to move beyond the chatbot into other domains, right? People are already using, you know, language models to interface with and find information about government without going to a government website. Sometimes they’re skipping these experiences. So, we have to start to think about how do we optimize government transactional services to be found through language models? How do we encourage them to go to the right place? How do we make sure the information is up to date? I think use cases there will be the ability to demystify all of the complexity of government at the front end of government, right? You know, think about all the processes that you have to go through. There’s a reason why people go to consumer language models is because it’s easier. They can just ask or they go to Google and now they get generative summaries. They can ask and it replies in a natural language way.
And I think now the opportunity is how do we take that and move beyond just regurgitating, you know, like a RAG-based search into allowing them to complete those transactions. So maybe I’m asking, hey, where do I pay this bill? Then I’m able to actually just do it right there. Go through the process, authenticate, pass identity over. You know, all these things that have to be dealt with from a plumbing standpoint are critical, but like that’s what’s necessary. So the killer apps, I think on the front end, will be allowing people to do things, not just read things. On the back end, I think employees are already using it, right? We see 62% of our employees, you know, within government agencies we work with have shadow AI utilization. And they’re leveraging AI, right? AI is here. It’s in the building. Agencies may not have a deployed like formal authorized strategy as it relates to that, but it’s here the moment has arrived. And so now it’s just figuring out how do you connect it in a way that deals with things like records, right? Like my favorite question to ask CIOs is okay, you know, someone scans your ordinances, the rules, the regulations that you’re drafting. They realize that one ordinance about some type of social benefit was written by AI. 67% of it was AI-generated. Now they’re going to challenge you to create all of the records around the prompts that led to that. How do you reply? Right? Do you go to ChatGPT and try to like, you know, export the conversation history? What if you did it across multiple systems, right? What if it was done through a shadow AI application? So all these things are going to start to drive all kinds of really interesting use cases that agencies need to be prepared for because it’s not a new piece of legislation. It’s something that’s already here. I think on the back office side though, you know, people are using it to already get value today. They’re doing administrative task with it. They’re finding ways to also demystify that same level of knowledge for them, right? As you think about all the rules and regulations that you have to comply with. It’s good to have another set of eyes or in this case, you know, an intelligent, you know, language model or buddy there that can help you walk through some of those processes. It’s great for elected officials. So, there’s a lot of new use cases that are emerging there as well.

We’re using an AI right now almost as a chat feature. With customer service, you know, people call in. We got 13 departments and I don’t want to have to have a customer service person at every department. So, we created a 311 center where we can have, you know, eight or so folks answering calls. But not everybody calls. I can tell you my son’s 21 years old. He won’t pick up the phone. On our website we have an AI bot called stacks and we have taught it answers to common questions and we’re using that to replace basically you know having to have 13 different customer service people that are going to answer these questions. So we’re trying to use it again for customer service. In terms of you know internal certainly we’re taking a look at different places we can use it. Can we use it to examine roads and see which roads need to be fixed and when? We have what’s called a PASER rating system. So can we look at which roads are PASER without having to put eyes on each of them? Can we do it with a Google pictures type system where we can take a look at all the quality of the roads. The issue with that is we don’t have all the materials to fix those roads. We don’t have the staff to fix those roads. So just identifying them doesn’t fix the problem. But if we don’t have to have people driving around 400 miles of roads, those are people that potentially can be doing more repair. Again, things like code compliance where you’re looking at numbers of complaints and where our resources are going. Same for police and fire. If we can put all that data into an AI and evaluate, you know, where our hotspots are, where we need more policing, where we need community policing, where our crime is in relation to other factors. Right now, we have data analysts that have to look through all that. So, if we can throw that into AI to help us to review that in a quicker time, that would save time and free up people’s time for other things.
So one thing that’s always really interesting about new technologies is how quickly both teams and residents embrace new tech. Right? So, as we continue our dialogue about AI, one of the things I’d like to understand better is like how do you think agencies can introduce AI in ways that preserve resident trust and reduce the risk of misunderstanding and enable residents to proceed with confidence if they are interfacing with an AI-powered solution for example?

Yeah. Oh, I love this question. I think in my view it’s important that agencies don’t go too far or they don’t have creepy types of solutions that know too much about you already, right? At least this is my own perspective. In other words, let’s go back to this document verification use case. I believe it’s such an important one because it starts with a resident giving information or uploading a document that they already would have anyway. It was already required for them. So the agency isn’t coming from a place of oh we already know all this about you and now they should use some information they do know to make it easier and we pride ourselves in that of course. But you know, if it gets too creepy, you got to be careful. And that’s why something like a document verification can be really, I think, a form of trust. Hey, I’m uploading the document. I can see the document I’ve uploaded. I can see the assessment and get that encouragement of, hey, this is the right doc. You got it. You’re good. Now, move on to the next step. To me that builds trust because it started with the resident giving information and then having AI assess that information and then the agency on their side they can build trust within their organization by also having the ability to see the document that was uploaded see the assessment done by the AI model and then you know if it clearly passed they can always get to it. So they can always see and like go in and look for themselves to see if that document really was the right document that was required or one of the right documents required but then also be able to change the assessment or be able to course correct some of the AI model. I think to me I like that use case a lot because I think it builds trust both on the resident side as well as on the agency side.

Yeah, I think it’s a great question and governance can’t be something that’s on a PowerPoint slide or buried into a policy. I would argue it’s something that you have to really figure out a way to actually implement. I think there’s a lot of different pieces as we look at what’s happening kind of with this overall infrastructure and the changes with technology, right? We’ve got to update all kinds of policies. You know, maybe your technology acceptable use policy needs to evolve. You need to figure out where AI intersects that. Of course, we see a lot of, you know, our clients using AI to create guidelines and other types of things. So, find ways to now implement that. You have to have some way from an enterprise standpoint to enforce that across all of the applications that you know about and the stuff that you don’t know about. I mean, and one of the most prevalent things we see is the vast majority of government AI use is the stuff that government doesn’t know about. So, you’ve got to think about how you shore that up, how you work within the construct of that and ultimately have a tool to deal with that. But I also think like data management, data governance, all of these other pieces are very important and there are elephants in the room that often get brushed over. Even things like privacy policy, you know, states are starting to pass new laws like Texas has TRAIGA which has implications on how we disclose the use of consumer data within AI systems at the point of entry. How do we deal with that? How do we even know that we have these new legal obligations that are emerging? That’s one state, but many more will come over the course of 2026.

It’s a great question. I think everybody’s trying to figure that out. I mean, using it to save time and money again without relying on it while double-checking it. You know, if somebody puts something into an AI reader or we throw something into AI and it tells us certain things that we just know can’t be true or if we say compare us to Ann Arbor, compare us to Columbus or other, you know, if we can figure out how other cities are doing things and how they’re fixing problems, we better check it and make sure that’s right. There’s too many examples of it being incorrect. I don’t want to use copyrighted information if we can help it. So just making sure that it’s checked, making sure that it’s accurate. If you look at say we used it to determine which roads are the worst roads and then we go and we fix those roads, that’s a good data-driven system. But if we do that, anybody who doesn’t get their road fixed is going to think we did it wrong. So, you know, sometimes you have to pay attention to the emotional and you have to build that in while still using data as much as possible.

Okay. So in this very dynamic environment, one of the things that I think we need to talk about for sure is what skills do you think are going to be the most important for public sector employees in 2026?

As far as skills, we have AI. We got AI here and it is not going anywhere. The genie has been let out of the bottle. And so I think the skill that people need is to embrace technology. It is here to help us. It is here to streamline processes. And I think everyone needs to embrace it. Once again, my whole campaign slogan when I was running for this position was a new generation of leadership and bringing the office into the 21st century.

Yeah, this is a great question. I get this one from my kids too. Like do I have to be a prompt engineer? Is that the future you know trade within government? I would say adaptability is like the most critical skill that every employee needs to have. And I would say regardless of your role, position, department, you know, even your operating mandate, we need to build a culture of continuous improvement. We need to build this beta mindset that government is going to be in a constant state of change. Right now, the timelines are compressed. Things are moving much quicker and we don’t have years to sit out on the sidelines and wait to figure out what happens. So, we need to condition our employees within the public sector that this is the new normal, that adaptability is key. I think transparency is going to be a critical aspect of that, right? There’s a lot of things where automation and new technology may not be replacing jobs, but they’re bumping up against it and that inevitably creates questions and concerns and fears. And so I think it’s important to be transparent and make sure that people are co-creating and designing these new processes. I think outside of that, we need to strengthen the core also, you know, look at what’s happening just from a cybersecurity standpoint and some of the other things that are there. A lot of the old kind of threat vectors are being lit up in new ways, but it reinforces a need to shore up the knowledge that, you know, we need to sometimes exercise like backup recovery, you know, all of those other things that are there, too. So, it’s not all just the new shiny stuff that’s coming. It’s also re-emphasizing the importance of making sure that we’re ready with the existing stuff and that we have all that stuff together on that standpoint. And yeah, that’s probably how I’d look at that.

All right, let’s talk about measurement. We always want to know how we’re doing. What metrics, outcomes should agencies be tracking when they do new technology investments? This could be AI specific or otherwise. Like what does good look like and how do you measure that?

Yeah. When I think about, you know, the most important metrics, right, I always start with some flavor of customer satisfaction, right? Or net promoter score, if you will. It’s like, how do I know I’m serving a constituent well if I’m not measuring how satisfied they are or how easy it is to do business with me if I were that agency? So I’d start there and I’d also think about where do I deploy my resources and what do I get in return? So how efficiently can I achieve the mission and I think it’s really powerful and then I think to the extent you can deploy modern software to take friction out for constituents you know one of the things that we know is and I forget where I read this but constituents are nine times more likely to believe the government is achieving their mission if they have a really positive digital experience with that government. And so things you can do to reduce friction or reduce the need to call or to show up or whatever it might be really powerful. And so when I think about that, I always think first about kind of customer satisfaction always, right? And then kind of engineer from there.

So a lot of it depends on the use. Oh yeah. If it gets used then it’s got value. We had a system a few years ago that was given to us that had all kinds of data and metrics and it was great and it wasn’t resourced to anybody so nobody used it. So you can have the best tool in the world and if nobody uses it is not actually doing any good for the community. So you know we need to resource it to somebody who understands it who can use it for decision-making. Just knowing, you know, where all the social services are, where all the housing is, just knowing the information is good to have, but it’s even better when it’s used for decision-making. So, if nobody’s resourced to do that or nobody is using the system as part of decision-making, then it’s probably a waste of money.
What about procurement? What are the challenges there? You know, modernization is happening at this sort of breakneck pace, but what is limiting modernization? How does procurement kind of fit into that picture and make it harder to maybe go as fast as folks would like?

Yeah. I mean, I think the biggest challenge around this is procurement was not designed to match the pace of modernization. It was really designed to match an older world of IT procurement. And so I think what we’re seeing is a lot of procurement departments are getting that feedback from their business counterparts and really starting to think about, you know, what does our process need to look like given the pace the world is moving at. And so when you think about moving from a very rigid process to something that’s much more agile and really thinking about, you know, how do you make sure that by the time you go through a process, the technology you’re trying to procure hasn’t moved? Because that’s what we’ve seen over the past few years is hey by the time you get a budget approved you put an RFP out you go through the whole cycle you implement a project the requirements as they were stated 2 or 3 years ago might not even be relevant anymore and so you’ve missed you know several years of modernization and we’re seeing a lot of our clients think about how do we think about contracting and procurement in a way that keeps up with the pace of technology especially given it’s continuing to get more and more rapid.

Okay, one last question. It’s kind of a free space. What other thoughts do you have when you think about 2026? Any observations, optimisms, cautions that you’d like to share?

I mean, I guess the only other thing I would share is like this is a really interesting moment with AI and there’s a lot of conversation on AI. There’s like 800 shiny objects that are all chasing government CIOs at any one point in time trying to bring in some new type of capability and that’s great right it’s exciting to see but I think the challenge is it’s moving so rapidly and we can very quickly you know go back to where we started with 800 data silos that are all fragmented that create all kinds of risk threat vectors for us and so I think now more than anything we need to also think about how do we connect all these intelligent apps so to speak into an enterprise strategy that we secure that we can manage that we can connect that we can use to transform the way that we do things and it doesn’t mean that everything is a best of breed point solution and it doesn’t mean everything is a consolidated single platform but it’s a mix of those two and I think making sure that you keep your eyes on the enterprise ball are going to be really important right now because it’s moving so rapidly and agentic AI is just around the corner we are starting to see consumers that are using their own personal agents to fill out government forms to complete government transactions to file open records request. So, if you’re sitting on the sidelines thinking you’ve got time, just wait because the bots are coming. They’re coming for your website. They’re coming for your forms. They’re coming for whatever archaic old school way that someone does a process. They’re coming for it. And it’s not a year from now. It’s weeks. It’s now.

Yeah. I mean, I think the other thing that we’re starting to see people really try to figure out the outcome to is I think a lot of people trying to overcome some of these challenges that we talked about around procurement cycles, around budgets have moved towards a lot of pilots and I think a lot of them are really struggling how do you take a pilot and move it into production and I think that’s something that people really need to be contemplating as they start on that journey. We found that it’s really hard for people to say like, I’m going to go pilot this thing and then I’ll go figure out how to procure it or how to implement it or how to change business rules later on down the line. You have to do that as part of a project so that the pilot becomes a phase in a project, not a project in and of itself.

I think one of the things that makes me so optimistic about 2026 and beyond is just sort of the art of the possible with modern platforms and modular capability and how quickly we can deploy really meaningful capability to serve residents and to serve governments alike. And I just think that’s really powerful. And then the rate of acceleration in what we can do once you have deployed modern capabilities and you’re connecting constituents to their government in new ways, you get this really powerful flywheel effect and network effect that constituents notice and it just pays off a lot of aligned benefits from constituent to the government. And it sort of really sets off this chain reaction of I guess positive impact in everybody in that chain. And that’s just really exciting. And it’s happening faster than ever if you have the right sort of partners in your ecosystem.

And that’s a wrap on 2026 predictions for how tech is going to impact state and local government. Thank you so much to everyone who joined us today and also to our guests who offered their insights. I hope everybody’s year is off to a great start and we would love to hear from you. If there are other topics or things that are on your mind where we can bring some experts together and have a dialogue about them, we’d love to hear from you. Shoot an email to us. Respond to the newsletter or the email that you use to register for this webinar and we’ll be on the lookout for it. And in the meantime, everybody have a fantastic rest of the day. Thank you so much for being with us.