AI agents in government: A transformation guide for state and local agencies

State and local government agencies are facing growing pressure to modernize quickly. Citizens increasingly expect public services to match the digital convenience of the private sector, a shift that accelerated during the pandemic and shows no signs of slowing down. 

At the same time, agencies are navigating the limitations of legacy systems, siloed infrastructure, shrinking funds and risk-averse cultures that make large-scale innovation difficult.

The challenge isn’t just technical — it’s human. IT departments are stretched thin, and are focused on maintaining aging systems rather than driving new initiatives. Budget constraints and persistent hiring challenges make it even more difficult to bring in the skills needed for modern transformation.

This has created a paradox: the need to innovate is urgent, but the capacity to do so is limited.

Where Agentic AI Enters the Picture 

This is precisely where agentic artificial intelligence presents a transformative opportunity. Unlike traditional AI that follows predetermined paths, agentic AI demonstrates autonomous decision-making capabilities and goal-oriented behavior. It can understand objectives, formulate strategies and take independent actions while adapting to changes in its environment. These are all critical capabilities for addressing government challenges. 

For resource-constrained state and local agencies, this represents a game-changer. By delegating tasks to AI agents, government organizations can focus personnel on strategic initiatives, complex problem-solving and building citizen relationships while agents handle routine operations. AI agents can process forms, answer citizen inquiries, analyze data for decision-making and provide 24/7 service availability without requiring additional staff.

Most importantly, AI agents can integrate with existing systems, operating as a layer on top of legacy infrastructure rather than requiring complete system overhauls. This allows for incremental, budget-friendly implementation while delivering immediate efficiency gains.

What AI Agents Could Look Like in State and Local Government 

Citizen services transformation: Some municipalities have implemented AI chatbots for their building and safety departments, helping residents navigate permitting processes. Those systems reduce call center volume, in some cases dramatically, and decrease time spent seeking permit information by half, all while providing 24/7 service availability. 

Public works optimization: Others have deployed AI-powered systems monitoring wastewater infrastructure. Using sensors and algorithms, those systems can reduce sewer overflows significantly and save hundreds of millions in infrastructure costs, all while continuously prioritizing maintenance based on predictive analytics. 

Emergency management: During natural disasters, AI platforms can serve important roles, with their ability to predict flooding patterns and prioritize emergency response. Those systems analyze weather data, topography, infrastructure details, and historical patterns to identify at-risk areas and assist evacuation planning, helping officials allocate resources more effectively. 

Workforce Transformation: Empowering, Not Replacing 

AI agents free government employees to focus on complex issues that require human judgment. Assistants can handle constituent inquiries, reducing case processing time and increasing job satisfaction as workers focus more on meaningful client interactions. 

For decision-makers, AI agents provide deeper analytical insights, and deliver real-time information about operations, trends, and potential issues before they become problems. 

Considerations While Exploring AI Agents

Information silos: Some AI agents are best aligned with a particular set of information silos; for example, Microsoft Copilot is geared toward information found in Microsoft systems. If your agency relies on multiple systems for information, look into AI agents that can work effectively with multiple enterprise software systems.

Deployment options: Many AI agents are limited to cloud deployments. If your agency’s information is on-prem and cannot easily be migrated to the cloud — either for security or cost reasons — you may want to evaluate AI agents that can be deployed in multiple environments.

Ethical AI: To promote accuracy and fairness, there are several key questions to ask before installing an AI agent in your agency: What mechanisms are in place to protect people’s data?  What accountability measures are in place in case of a dispute? How is the accuracy of the AI determined? What processes are in place to manage risk? 

In most cases, keeping a human in the loop can address these and other questions around ethical AI.

The Future of AI Agents in Government 

Emerging trends include: 

Collaborative agent networks: Multiple specialized agents working together on complex processes while sharing information to achieve common goals. 

Enhanced learning capabilities: Next-generation agents with faster adaptation to new situations and improved human-feedback learning. 

Increased autonomy with oversight: Agents handling more complex tasks independently while maintaining appropriate safety measures and human supervision. 

Faster self-service: Citizens accessing services more efficiently through platforms with built-in generative AI and workflow automation. 

Moving Forward: Practical Next Steps 

Agencies should start with clearly defined, limited-scope projects that address specific pain points, particularly routine processes with clear rules. Successful implementation requires stakeholder involvement from the beginning, including employees who will work alongside these systems.

Governance frameworks must be established early, with clear policies for data usage, decision-making authority and human oversight, developed collaboratively with legal, IT and operational teams, as well as community representatives. 

By taking these measured steps, state and local governments can harness AI agents to deliver more responsive, efficient, and citizen-centered services.

Keith Nelson, Sr. is an industry marketing strategist at OpenText.