The future of municipal work is already here

The future of work in local government is no longer a forward-looking concept. It is already shaping how municipalities operate, deliver services, and make decisions today.

Last year’s findings pointed to growing interest in digital tools, particularly AI, as local governments explored new ways to improve efficiency and service access. That interest remains. What has changed is how it is showing up in practice, with greater focus on applying these tools in day-to-day work.

The 2026 MNP Municipal Report shows a sector that is actively modernizing with varied degrees of progress as leadership works to sustain capacity, support employees, and maintain consistent service delivery. Priorities are clear. Technology is advancing. Expectations are rising. But the underlying systems that support how work gets done have not evolved at the same rate.

Workforce demands, financial constraints, service expectations, and digital capability are all moving at once, influencing how local governments plan, lead, and operate every day. As a result, organizations are becoming more focused as they work to maintain continuity, manage competing demands, and keep pace with ongoing operational change.

Here are some of the key findings from the 2026 MNP Municipal Report.

Local governments continue to focus on core responsibilities, but with greater urgency and sharper prioritization.

• Cost management is now the top priority for 70 percent of respondents, up from 62 percent last year.
• Customer service remains steady at 65 percent.
• Cyber security and privacy continue to rank high at 62 percent.

These priorities may not be new, but the intensity behind them is. Financial discipline is being reinforced while expectations for service performance remain high, and the need to protect systems and data continues to grow.

Leadership capacity is also under strain. Respondents now identify senior leadership roles as the most difficult to recruit and retain (40%), adding complexity as organizations work to maintain direction while responding to increasing demands.

Rather than expanding their focus, organizations are narrowing it. Time, resources, and attention are being directed toward a smaller set of high-impact priorities.

Workforce challenges are becoming more evident in how work gets done.

More than half of respondents report high workloads and stress levels, and 57 percent say change fatigue is affecting engagement and the ability to keep work moving on schedule. These pressures are impacting how quickly priorities advance and how consistently outcomes can be maintained.

Local governments are placing greater emphasis on how they support their teams:

• Leadership communication is identified by 43 percent of respondents as a key factor during periods of change
• Training and support programs are highlighted by 41 percent as critical to helping employees adapt

Support now plays a direct role in performance, continuity, and the ability to maintain momentum.

Digital tools are now part of everyday operations, but adoption is outpacing the structures needed to support it.

• Digital literacy, including AI, is identified by 53 percent of respondents as a critical future-ready capability
• The ability to use AI in daily work, such as applying AI software to tasks and processes, is one of the most impactful skills, according to 37 percent of respondents

However:

• 34 percent of organizations have provided no guidance to employees on how and when to use AI tools, and 42 percent provide no training or resources to help employees use AI effectively
• 54 percent of respondents cite lack of expertise as their top AI implementation challenge

This suggests that while the priority is clear, the gap between aspiration and enablement remains significant.

As technology becomes more integrated into everyday operations, local governments are also rethinking how skills are developed and supported across the organization.

Many organizations are still working through how these expectations translate into daily practice, and most are doing so without a unified approach. Only 25 percent of organizations have a formal, organization-wide reskilling or upskilling strategy in place, while 22 percent report having no skills development plan at all. Workforce planning itself remains largely reactive, with only 18 percent of organizations taking a proactive, data-driven approach.

Given the continued growth in operational demands, greater clarity in roles, workflows, and coordinated skills development will become increasingly important.

Public expectations for municipal services continue to rise, influenced by experiences both inside and outside the public sector.

Residents and businesses expect services that are accessible, consistent, and easy to navigate. Meeting these expectations requires more than improvements within individual departments.

It requires alignment across the organization on:

• Stronger coordination across departments
• Clearer ownership of services
• Systems that support end-to-end delivery

This connects directly to the priorities identified earlier, particularly customer service, operational efficiency, and workforce capacity. As these pressures converge, improving how work moves across teams is becoming essential to maintaining consistent outcomes.

Efforts are increasingly focused on improving how work connects across teams to produce more reliable and coordinated service experiences.

Leadership continues to stand out as one of the most important factors in how local governments respond to these changes.

Leadership and management are identified as the most important future-ready capability by 58 percent of respondents. This reinforces the role leaders play in setting direction, supporting teams, and maintaining momentum.

Leadership is closely tied to workforce capability. Employees need the skills and confidence to operate in a more integrated, digitally enabled environment. Sixty-six percent of municipal employees surveyed are confident in developing future-ready skills, but that confidence is cautious rather than assured, tempered by uncertainty about whether current approaches and capacity are sufficient.

The report’s findings consistently point to the same conclusion: progress depends on how well leadership, workforce capability, and digital readiness come together in practice. The organizations that align these elements will be best positioned to sustain operations and strengthen outcomes for their communities.

Local governments are continuing to adjust how work happens while maintaining the services their communities rely on every day.

For many municipalities, the next phase will be defined by consistency. Maintaining focus, supporting employees, and aligning efforts across the organization will be key to sustaining progress.

MNP works alongside local governments in communities nationwide, bringing deep knowledge of local government operations, workforce dynamics, and public sector governance. If these findings resonate with your organization’s experience, the full report offers data, perspectives, and practical context to support your next steps.

Katie Hayes is a Manager with the MNP Digital Advisory team in Edmonton. She is an accomplished innovation and transformation leader who works with organizations to transform complex challenges into opportunities for growth. Katie is passionate about bringing people and technology together to solve problems and enhance organizational effectiveness.