Imagine the monumental task of managing a city's budget. It's a complex puzzle of balancing essential services, community programs, and fiscal responsibility. Traditionally, this process is often siloed by department, making it difficult to see the bigger picture. But what if you could get a data-driven, city-wide view to ensure every dollar is spent as effectively as possible? The City of Olympia, Washington, is doing just that, and their secret weapon is artificial intelligence.
A New Era of Budgeting
Olympia has embarked on a journey called priority-based budgeting, a modern approach that shifts the focus from funding departments to funding programs and services that deliver the most value to the community. As Assistant City Manager Debbie Sullivan explained, this method helps the city “tell the story of what we do, why we do it, and how much it costs.”
To bring this vision to life, the city invested $134,750 to partner with Tyler Technologies. This collaboration involved feeding the city's budget data into an AI system designed to analyze and score every program. The AI evaluated services based on four key criteria: impact, reliance, mandate alignment, and cost.
What the AI Uncovered
The results were eye-opening. The AI-generated a 300-page report filled with insights, opportunities, and recommendations. It wasn't just about cutting costs; it was about optimizing resources. The system identified more than 30 programs that were having a low impact relative to their high cost.
Here’s a breakdown of the findings:
- Low Impact, High Cost: The AI flagged 13 programs where the city had invested over $27 million, despite them having low impact, low reliance, and no legal mandate to operate.
- High Impact, Low Cost: On the flip side, 20 programs, representing a $5 million investment, were identified as highly effective and essential. The AI suggested exploring grants or cost-recovery fees to support these vital services further.
- High Impact, High Cost: The system also analyzed 29 core programs, a massive $93 million investment, that are central to the city's mission. While essential, the AI suggested looking for efficiencies within this “unique core.”
In total, the AI system identified a staggering potential for savings and new revenue between $19.4 million and $28.4 million. It achieved this not by suggesting tax hikes, but by looking at best practices from other cities, proposing new fee structures, and identifying opportunities for grants and private sponsorships—much like the successful model used for the city's seasonal ice rink, Oly on Ice.
The Human Element: AI as a Co-pilot
This isn't a story of robots taking over city hall. City Manager Jay Burney and his team emphasize that the AI report is a starting point, not a final decree. The city's leadership is now meticulously reviewing every recommendation to check for errors, false assumptions, and feasibility under Washington state law.
“This gives us ideas to think about how we do work,” Sullivan noted. “It will help us prioritize opportunities, implement best practices, and continue to monitor and adjust.”
The next steps involve workshops with department heads to discuss the findings, followed by sessions with the City Council and public communication to ensure transparency. It's a collaborative process where AI provides the data, and humans provide the context, wisdom, and final decision-making.
Olympia's innovative use of AI serves as a powerful case study for other municipalities looking to navigate complex financial landscapes. By combining advanced technology with human oversight, they are building a smarter, more efficient, and more responsive government for their citizens.
Key Takeaways
- Priority-Based Budgeting: Olympia is shifting its financial focus from funding departments to funding high-impact community programs.
- AI-Powered Insights: An AI system analyzed city services to identify areas for cost savings and revenue generation.
- Significant Potential Savings: The analysis uncovered between $19.4 million and $28.4 million in potential financial improvements.
- Humans in the Loop: The AI's recommendations are being carefully vetted by city officials to ensure they are practical and legally sound.
- A Model for the Future: Olympia's approach could become a blueprint for other cities aiming for greater fiscal efficiency and transparency.