AI in government: impact to the public sector

Artificial intelligence is reshaping industries, and the public sector is no exception. Governments at all levels—federal, state, and local—are adopting AI to streamline processes, enhance service delivery, improve customer experience, and maintain compliance with new policies and mandates. However, operating in a highly regulated environment presents unique challenges and opportunities for AI adoption.

The constraints of government technology

Government agencies at the federal, state, and local levels operate in an environment filled with regulations, policies, and legacy systems that limit their ability to modernize. While leaders recognize the need for transformation, they often lack the capacity to implement change efficiently. Compliance mandates, for example, require extensive reporting, and manual processes can take months to complete, pulling staff away from their core mission of serving constituents.

Despite these challenges, AI presents a unique opportunity to help governments adapt quickly. In fact, according to a survey conducted by EY, 51% of government employees at the federal, state, and local levels use AI applications at least several times a week. The survey also revealed that AI adoption is highest in federal agencies, with 64% of respondents reporting daily AI use—more frequent than in state and local governments. By automating repetitive tasks, improving compliance processes, and enhancing situational awareness, AI allows government employees to focus on higher-value work that directly benefits the public.

4 benefits to AI in government operations

State and local governments face mounting pressure to modernize. Legacy systems, bureaucratic processes, and strict compliance requirements make innovation difficult. AI presents four opportunities to overcome these hurdles.

1. Automate compliance and reporting

Government agencies must comply with evolving policies and regulations. Traditional compliance reporting is labor-intensive, often requiring significant staff time to compile audit reports. AI-powered solutions, such as intelligent document processing, automate the extraction and organization of data, reducing compliance burdens while ensuring accuracy.

For example, in the construction industry, regulations require digital records of lead pipes within a certain population radius by 2030. AI can also support compliance with EPA regulations requiring water systems to develop a service line inventory to identify and replace lead pipes. By automating data extraction and mapping service lines, AI helps agencies meet these requirements more efficiently while ensuring safer drinking water for communities.

2. Improve infrastructure and public safety

AI also enhances situational awareness, helping government agencies manage infrastructure more effectively. By digitizing asset records—such as water lines, gas pipes, and power grids—AI allows agencies to respond faster to emergencies like fires, earthquakes, or gas leaks.

Even for everyday interactions, AI-driven data can be invaluable. For example, when a resident applies for a construction permit or plans a home improvement project, AI helps city planners quickly identify potential conflicts with underground utilities, improving safety and efficiency.

3. Speeding up government services

Navigating municipal services—such as applying for permits, accessing public records, or paying fines—can be frustrating due to outdated processes. AI is helping governments eliminate bottlenecks, making it easier for citizens to interact with their local agencies.

Traditionally, site inspections for permitting required an in-person visit, adding delays and costs. AI-powered digital records eliminate the need for on-site inspections in many cases, allowing cities to process permits faster and generate revenue more efficiently.

4. Enhancing informed decision-making

AI’s potential extends beyond automation. It can assist decision-making by analyzing large datasets, identifying patterns, and offering insights. However, in regulated environments, decision automation carries risks. For example, government agencies handling public assistance programs are cautious about using AI to determine eligibility, ensuring that human oversight remains central to critical decisions.

One promising application is case management for social services. AI can consolidate data from multiple sources, providing social workers with a holistic view of an individual’s history and needs. This approach, called whole-person care, enables early intervention, reducing long-term costs and improving outcomes.

Balancing automation and human oversight

AI’s role in government is to free up human capacity for higher-value tasks. By automating transactional and repetitive tasks, AI allows government workers to focus on what truly matters: human connection, critical thinking, and compassionate care.

A powerful example is case management in social services. Caseworkers handle complex issues like homelessness, mental health, and public assistance, where every situation requires personalized attention. AI can’t replace the empathy and judgment caseworkers bring to their work, but it can support them by consolidating scattered data across agencies, giving them a fuller picture of the individuals they serve.

The “whole-person care” approach isn’t just about efficiency—it’s about ensuring people receive the right support at the right time. AI helps caseworkers cut through administrative burdens, so they can spend less time on paperwork and more time building relationships, advocating for resources, and making a direct impact on people’s lives.

At its core, AI in case management isn’t just about creating a better tool—it’s about creating a better way to care.

Ensuring AI adoption is responsible and secure

Given the sensitive nature of government data—such as personal information, records, and financial data—AI implementation must be done responsibly. That balance is critical in sensitive areas like healthcare and law enforcement. While AI can help streamline administrative tasks, governments must ensure that human judgment remains a part of decisions affecting people’s lives. Agencies must focus on:

• Transparency and accountability: AI decisions must be explainable and traceable.
• Data security: AI models handling government data should prioritize compliance with cybersecurity best practices.
• Human oversight: AI should assist decision-making rather than operate autonomously in critical areas such as healthcare and social services.

What’s next for AI in the public sector

The public sector is at an inflection point. While governments have long relied on technology, generative AI represents a leap forward, reducing the time and cost required to deploy solutions. AI-driven automation and decision-support tools can help governments:

• Respond to crises faster by mapping real-time infrastructure data
• Improve citizen interactions through AI-powered virtual assistants
• Secure sensitive data with AI-driven threat detection and compliance monitoring

However, success requires a governance-first approach. Governments must prioritize transparency, accountability, and data security to build trust in AI-driven systems. By doing so, they can harness AI’s full potential—improving efficiency while maintaining public confidence.

The next frontier for AI in government is automating and optimizing procurement—one of the most regulated and time-consuming processes in the public sector. AI can assist procurement officers by analyzing vendor proposals, ensuring compliance, and streamlining decision-making, while still allowing human experts to make final selections.

AI isn’t about making government invisible—it’s about making it work better. The best government services are those that citizens don’t have to think about because they just work.