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Guide to Municipal IT Budget Planning
Learn about the components of an IT budget, essential cybersecurity line items, why you should take a risk-based budgeting approach, and how AI is impacting municipal technology.
IT lumped into a single line item
The entirety of a municipality’s IT sometimes appears as a single line item such as “computers” or “technology.” This categorization oversimplifies IT and misses important items.
IT spread across different departments
While a department may very well oversee its own IT budget, many municipalities centralize technology. By spreading IT and cybersecurity line items across departments, you lose insight into your overall IT assets and investments.
Incorrect labeling of IT
Some municipalities mislabel IT, categorizing it as “office supplies” or “professional fees.” When mislabeled, you lose visibility into your IT investments.
What's Inside this Municipal IT Budget Planning Guide?
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1
Components of an IT Budget
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2
IT Budgeting Categories
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3
Risk-Based Approach to IT Budgeting
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4
Let Technology Spur Your Vision
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5
Unique IT Budgeting Items for Police, Fire, and Water/Sewer Departments
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6
Presenting to Council: Connecting the Non-Technical to the Technical
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7
IT Budgeting Examples and Formats
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8
How Municipalities Are Adding AI to Budgets
Short on Time? Download the PDF ⬇️
Instead of viewing your IT budget as a list of random components, it’s helpful to look at it through a risk-based lens. Risk-based budgeting prioritizes and allocates resources based on an assessment of potential risks and the strategies needed to mitigate them.
With a risk-based approach, you examine your current IT budget to see if you’re:
- Underinvesting in important cybersecurity measures that help you protect sensitive information and assets, potentially leaving you wide open to a devastating cyberattack.
- Increasing the probability of downtime, permanent data loss, and operational system failures that negatively impact resident services and employee productivity.
- Threatening the success of important projects and initiatives because you don’t have basic foundational technology capabilities in place.
To approach IT budgeting from a risk-based perspective, it’s important to take a few steps to make sure your dollars are prioritized for maximum impact.
- Conduct an assessment of your environment and infrastructure: A thorough assessment identifies potential risks such as your ability to fend off cybersecurity threats, the impact of technology obsolescence, regulatory compliance challenges, IT-related project delays, and other uncertainties.
- Prioritize next steps: Once risks are identified, they are assessed and prioritized based on their potential impact. Risks that pose a higher impact and likelihood receive greater attention.
- Allocate budget for risks and contingencies: Resources are allocated in your budget based on the prioritized risks. Areas with higher risks may receive increased budget allocations to implement preventive measures, mitigation strategies, and contingency plans. This ensures that critical areas are adequately funded to address potential challenges.
Roadmapping is also part of the goal here. An IT budget is ideally used as a way to create a long-term plan where gaps are identified, investments are prioritized for the highest-risk areas, and items are checked off starting with the most critical.
Risk-based budgeting is an iterative process that involves continuous monitoring of risk factors and reassessment of your budget throughout the fiscal year. This enables municipalities to adapt their budgetary allocations in response to emerging risks or changing priorities.
By integrating risk considerations into the budgeting process, municipalities can enhance their ability to anticipate, respond to, and mitigate potential challenges. This approach promotes a more resilient and adaptive IT environment aligned with your risk tolerance and strategic goals.
To get started with a risk-based mindset, we’ve identified 5 common risks that often impact municipalities.
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OR AUDIT?
If you haven’t conducted an IT assessment or audit in quite some time, then you may want to invest in one. An IT assessment can provide you information about:
- Adherence to IT best practices
- Gaps and risks
- Pressing needs
- Assets
- Cybersecurity and data protection
- Policies and procedures
With an assessment in hand, you will have specific recommendations that you can act upon and an easier business case to make for investing in critical areas.
Action items:
- Seek out experienced IT professionals or consultants to conduct an IT assessment/audit.
- Cooperate with the assessment/audit so that the professionals are working with as much information as possible.
- Act on the recommendations—do not sit on any high-risk areas identified in the assessment.
2. IS MY DATA BACKUP TESTED AND OPERATIONAL?
All it takes is one data loss incident to significantly impact a municipality’s budget. If you cannot recover or use your data
for days or weeks, you impact municipal operations and risk increased expenses. We find that IT costs skyrocket for towns and cities that use inadequate data backup solutions, especially when a server fails and they cannot recover the data without time-consuming, expensive help.
Action items:
- Acquire an onsite/offsite data backup solution if you lack one. It is critical to invest in a data backup solution with an onsite and offsite component.
- Test your data backup solution to ensure that it works and your investment will pay off in the event of an incident.
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3. IS MY HARDWARE AT END OF LIFE?
Old hardware results in processing delays, server and desktop failure, and lost productivity. While you might feel you’re maximizing an investment by keeping hardware until it dies, hardware gives you significantly diminishing returns after many years—costing you money once it becomes obsolete, ineffective, and unable to meet the demands of municipal business.
For municipalities leaning toward as many operational expenses as possible, Hardware as a Service (HaaS) is a good option. With HaaS, you can access and use hardware resources without having to purchase or own the physical devices outright. HaaS providers often refresh hardware regularly to ensure users have access to the latest technology. This means municipalities can benefit from up-to-date and more efficient hardware without worrying about the cost of purchasing new equipment.
Action items:
- Assess the age of your hardware assets.
- Identify any assets at or near end of life. Some common end of life risks include:
- Windows Server 2012 (end of life now)
- Windows 10 (end of life October 2025)
- Windows Server 2016 (end of life January 2027)
- Budget for upgrades—the upfront investment will eventually pay for itself through lower support costs, increased operational productivity, and less chance of sudden equipment failure.
4. HAVE I RECENTLY EVALUATED OUR ISP OR TELECOM PROVIDER?
Have you used your current providers for many years? Are you locked into a multiyear contract? If so, those are clear signs that you could potentially shop around and lower your ISP/telecom costs. We’ve seen many towns and cities unknowingly suffering from poor yet expensive service, when higher quality and less expensive service exists. If you’ve neglected to examine or challenge this line item for many years, a switch in providers or a renegotiation may potentially save you money.
Action items:
- Use IT professionals to help you shop for competitive ISP and telecom options, especially if you haven’t sourced options in a long time.
- Use their information to see if you can reduce your costs while increasing quality of service—either through negotiating with your current provider or switching to a new provider.
5. ARE MY IT SUPPORT COSTS UNPREDICTABLE?
Many towns and cities use IT vendors or contractors that seem inexpensive on the surface but usually gouge a municipality’s
budget with expensive and unpredictable billing during the year. If your annual IT support costs are too unpredictable, you
can save money with a more efficient model that includes proactive IT support with a predictable monthly fee.
Action items:
- Look at your IT support costs. Do they vary wildly month to month, or year to year? Are you able to predictably budget for these services?
- If you see unpredictability, source more proactive IT support options and compare those costs—and what you’re getting—to your current IT support.
- Consider switching to a proactive IT support model with predictable budgeting so that a variety of commonly needed services are all under one fixed cost umbrella.
So, you’ve got the components and you’ve taken a stab at some numbers. Looking at your current IT budget (or lack thereof), you might wonder what an IT budget should look like.
We’ll provide two examples that show what might be sufficient for a small and a medium municipality.
SMALL MUNICIPALITY BUDGET
A small municipality can budget for IT with a few line items. For example, a municipality of 5,000 people might have the following annual budget.
Note that each of the categories are not overwhelming to a small municipality. The few items in the IT budget all fit within the structure. Operational and capital expenses are noted, and most basic IT best practices are followed. The budget gives no insight into how the budget connects with the municipality’s vision, but this will either be more apparent in the overall budget document or give the municipality an opportunity to tie technology and vision together better next year.
MEDIUM MUNICIPALITY BUDGET
In this municipality of 20,000 people, there are simply more components that need to be tracked. They organized information slightly differently although all the components we’ve discussed are included.
As you can see, a larger municipality has more IT “stuff” to track—but the categories we provided in this whitepaper can expand to account for extra line items.
Many municipalities use simple spreadsheets for their IT budgets, especially if they are not terribly complex. Eventually, these IT budgets make their way into the overall municipal budget. Specialized IT budget and strategic planning apps exist that may help with adding structure and sophistication to your process.
How Municipalities Are Adding AI to Budgets
Municipalities are increasingly leveraging artificial intelligence (AI) to enhance efficiency, improve services, and address various challenges. It’s a fascinating topic, but sometimes AI can seem impractical and visionary when you hear real world examples discussed in presentations or in the media.
To bring the discussion down to earth, let’s look at some practical ways that municipalities can use AI:
- Public Safety and Emergency Response: AI is employed in public safety applications, including predictive policing for crime prevention, emergency response optimization, and analysis of social media and other data sources to identify potential threats or incidents.
- Water Management: AI is applied to monitor and manage water distribution systems, detect leaks, and predict equipment failures. This improves water conservation, quality, and overall utility efficiency.
- Waste Management: AI is used to optimize waste collection routes based on factors like historical data, real-time usage patterns, and environmental conditions. This helps reduce costs and minimize environmental impact.
- Urban Planning and Development: AI is utilized in urban planning to analyze demographic data, traffic patterns, and environmental factors. This assists in making informed decisions about zoning, infrastructure development, and land use.
- Resident Services: AI-powered website chatbots and virtual assistants are employed to handle citizen inquiries, provide information, and streamline interactions with municipal services. This enhances customer service and responsiveness.
- Traffic Management and Optimization: AI-powered traffic management systems analyze real-time data from cameras, sensors, and other sources to optimize traffic flow. This includes adaptive traffic signal control and dynamic routing to reduce congestion and improve transportation efficiency.
- Energy Efficiency: AI is employed to optimize energy consumption in municipal buildings and facilities. Smart grids and AI algorithms can help manage energy distribution, reduce costs, and promote sustainability.
- Smart Infrastructure Management: AI is used to monitor and manage infrastructure components such as roads, bridges, and utilities. Predictive analytics can help identify potential issues, allowing for proactive maintenance and minimizing downtime.
