The Budgeting Process: Governments Find Power in AI

Amid tightening budgets and rising demands, local governments and school districts are turning to artificial intelligence (AI) to revolutionize their budgeting processes. By leveraging AI tools, these agencies are discovering new efficiencies and funding opportunities that align resources with community priorities and save money.

Budgeting in Times of Resource Scarcity

Budgeting with limited resources is one of the biggest challenges facing local governments. Making informed decisions about funding allocations is even more daunting when faced with resource scarcity, stagnant budgets, and the strains of a changing workforce.

Traditional budgeting methods, including across-the-board program cuts without regard for prioritization and resource allocation based on current trends, have failed to lead to informed, effective decision-making. Answers to questions such as how funding streetlighting improvements relates to a city’s priority of reducing crime, for example, are simply out of reach.

Without the context necessary to connect line-item expenditures with programs and community outcomes, agencies struggle to make informed decisions. Such line-item budgeting has led forward-thinking programs such as climate action, infrastructure, cybersecurity, and safety to go unfunded. Additionally, governments still mired in traditional budgeting methods can be increasingly burdened by a shrinking workforce, largely made up of tech-focused Generation Z workers lacking institutional knowledge.

Moving from line-item budgeting to a method that is priority-based has allowed small and large government agencies to create new partnerships, identify efficiencies, and pinpoint priority programs. By meeting the needs of their communities and focusing on societal goals, municipalities across the country are focused on the horizon.

Real Data for Resource Allocation

Chris Fabian, senior director of product strategy, ERP budgeting at Tyler Technologies, spoke on a recent Tyler Tech Podcast episode about the inspiration behind Tyler’s Priority Based Budgeting, a solution and driving force behind this transformation. “Priority Based Budgeting is a handy lens, so to speak, to ensure that we can thoughtfully question where all the money goes today and ensure that we can find ways to reallocate it toward the underfunded priorities that always are in need of additional resourcing,” said Fabian.

In Priority Based Budgeting, AI and machine learning were employed to make complex budget data actionable across the public sector. This technology helps communities find efficiencies and make predictions for reallocating resources using a priority-based budgeting model. The result allows agency leaders to, Fabian said, “put their money where their motivations are,” that is, to align government resources with a community’s highest priorities.

Priority-Driven Budget Solutions

The rise in the number of priority-based budgeting success stories reveals when agency leaders use priority-driven budget solutions, the impact can be felt globally as well as locally:

• When Pittsburgh, Pennsylvania, was struggling to maintain core services during COVID, implementing a priority-based budget model allowed city leaders to identify $41 million in resource reallocation and new revenue. As a result, they were able to free up funding for a climate action plan, fulfilling aspirations to focus on the future.

• In Washington County, Wisconsin, County Executive Josh Schoemann took the lead in reallocating 15% of his small county’s entire operating budget using a priority-based budgeting framework. This effort turned government-dependent Parks & Recreation into a 100% self-sustaining department.

• Fort Worth, Texas, has future-proofed its budgeting process by focusing on individual programs rather than traditional line-item expenditures. By evaluating programs against multiple criteria, such as mandate requirements and revenue potential, the city aligns its financial resources with strategic priorities like public safety and infrastructure needs.

Priority Based Budgeting Is Transforming Communities

Tyler Technologies’ Priority Based Budgeting is leveraging AI to help communities align their budgets with strategic priorities, uncover opportunities to save money, and optimize operational efficiencies.

Easing the Lift of Budgeting

AI modeling significantly eases the lift of program budgeting, helping local governments as they recover from pandemic-era workforce shortfalls. By analyzing massive data sets, AI uncovers patterns and makes logical connections between programs and priorities. This AI-driven approach allows agencies to effectively manage the budgeting process despite limited human resources. It also compensates for the loss of retiring baby boomers while attracting Gen Z workers who are drawn to cutting-edge technology and data-driven decision-making.

And when government agencies put priority-based budgeting to work in their communities, it provides the added benefit of transparency. Tyler’s Priority Based Budgeting supports a transparent budget-development process, showing that investments are made thoughtfully and in alignment with strategic priorities.

Ushering In a New Era

Priority-based budgeting is poised to become the new standard for state and local governments across the country. By embracing priority-focused budget reallocation, government leaders can look to the future of their communities with confidence and renewed excitement, even in the face of resource scarcity.