The 2026 Tech Upgrade for Cities and States

Public sector agencies like cities and municipalities have historically been hesitant about investing in new technologies. However, this trend is changing quickly, according to recent reporting.

As of the end of 2025, research from one of the largest polling firms shows a two-year increase of 17% in the application of tech use among government and other public sector workers. Admittedly, the total percentage of workers who say they use technologically advanced tools and artificial intelligence (AI) products is small when compared to private sector figures. But it’s an indicator that cities and states are moving away from outdated systems and processes.

What’s behind the move toward modernizing legacy systems with AI in government? Five trends seem to be helping public sector organizations minimize the volume of their paper trails and motivating their leaders to rethink the value of technology.

1. Economicdoability

Organizations that serve the public tend to be strict about spending. In fact, many are expected to produce public-facing documents outlining the way money moves in and out of their systems. As a result, their leaders have not always wanted to pay for the latest technologies because they look “bad” on their end-of-year reports.

Fortunately, costs related to technology have become less of an issue. For instance, many cloud-based AI tools are free to use (and are still secure). Although these tools aren’t necessarily going to allow for complete transformation of a public sector office’s workflows, they can help reduce redundancies of tasks. This allows the free or inexpensive products to be useful without becoming a financial strain.

2. Widespread acceptance

The average person interacts with technology in a variety of ways throughout the day. From using cell phones to interacting with drive-through digital kiosks, citizens are familiar and comfortable with tech. Consequently, they expect to be able to digitally interact with government agencies in the same way they digitally interact with private companies.

To meet their expectations and adopt tech in safe, reliable ways, public-facing entities are working with consulting firms that can help them engage with citizens in familiar ways. For example, EY offers tech-strategy implementation services to public sector clients that want to improve their processes and systems with advanced technologies. That way, citizens get the familiar convenience they want from their interactions with cities and states.

3. Predictive capabilities

One of the most compelling advantages of AI is that it can interpret large sets of structured data. In that capacity, AI can help public sector organizations predict how to best serve their population base as well as improve efficiencies.

Case in point, an AI product may be able to use data to help a government agency predict its budget needs. After all, AI tools can run many types of predictive reports, showing scenarios that could happen. This allows public sector workers to gain more insights into possible outcomes before making any decisions. It’s a more sophisticated way of creating budgets that are backed by numbers rather than political considerations.

4. Improved governance and regulations

Today, governments are working hard to put measures into place to protect citizens’ data from exposure as public sector entities begin to use more technologies. Consequently, cities and states have less reason to be concerned about bringing tech products like software and applications into their operational workflows.

In time, more policy initiatives will be created around the world. Accordingly, public sector agencies will have fewer reasons to avoid technology. Certainly, the challenge of cybersecurity will always exist. However, strong rules and regulations should mitigate many of the concerns that are keeping municipalities and public entities from considering higher tech products.

5. Worker training accessibility

Technology doesn’t work without humans. But humans need to be trained on tech tools before they can appropriately and effectively use them. Fortunately, low-cost training programs exist to bring workers up to date on advanced products they can use on the job.

Some makers of tech tools, including AI systems, will provide extensive training programs to public sector clients that invest in their products. Since their learning opportunities are built into the cost of purchasing their technology, they’re an added benefit that doesn’t cost extra.

Make no mistake: The tech upgrade that’s happening in 2026 across public sector organizations isn’t going to be fast-moving. Based on the available data, its pace won’t match the speed of tech adoption in the private sector. Nonetheless, the fact that it’s happening at all shows that government-run entities are finally becoming more technical and getting rid of their traditional reliance on paper systems.

The content has been authored in collaboration with our guest contributor, Awais Ahmed.