For state and local governments, 2026 represents an inflection point—a year where sustained strategic preparation converges with unprecedented opportunity to deliver mission-level outcomes and transformational results for the communities we serve.

The groundwork has been laid. Public sector organizations have invested in cloud platforms, cybersecurity foundations, data environments, and digital tools. What lies ahead is a fundamental shift in mandate: from building capacity to exercising it – decisively, securely, and at scale. This is the moment when leadership moves from enablement to impact. This is not just another year of incremental progress—it's the year when public sector innovation moves from promise to practice, when pilots become platforms, data becomes a strategic asset, and technology investments translate directly into faster services, better decisions and greater public trust.

Five defining trends will guide how forward-thinking state and local governments leaders unlock this potential in 2026. Together, they chart a path from where state and local governments are to where they need to be—responsive, resilient and results-driven.

Trend 1: From pilots to production with AI

(AI)-led technologies have moved faster than any technology that the government has adopted in the past two decades. After extensive pilots and assessments over the past couple of years, 2026 will be the year of execution.

Today, many agencies are using AI at the front end, particularly chatbots on websites, virtual assistants in call centers, and tools for summarization or drafting. These are useful starting points, but they represent only a fraction of AI’s potential. The real value will come when AI is woven into core workflows: automating routine transactions, augmenting decision-making, resolving service requests, and augmenting staff productivity.

Yet readiness remains uneven. In a recent NASCIO study, only 20% of public sector organizations said their data governance was mature. This is a critical gap at a time when AI systems increasingly depend on trusted, well-managed data to operate safely and at scale. True maturity will require operationalizing governance through clear data ownership, quality standards, risk assessments, human oversight and continuous monitoring.

In 2026, government must shift from AI pilots to execution - moving beyond surface-level use cases to embedding AI in core workflows. Agencies that pair this transition with mature data governance and operational discipline will be best positioned to safely scale AI and deliver measurable public value. Find out how we are enabling AI for state and local government and education

Trend 2: Cybersecurity shifts to built-in resilience and privacy by design

Cybersecurity has evolved from an IT function into a whole-of-government responsibility. Even as threats grow more sophisticated, persistent and costly, agencies are under increasing pressure to expand digital services and adopt AI quickly. This combination of urgency and complexity has fundamentally raised the stakes for cyber risk.

To reconcile the need for speed with the need for trust, agencies must shift from reactive defense to proactive design. Zero trust architectures, continuous monitoring and proactive risk assessments need to become foundational practices. Agencies must mature their AI risk management by auditing models, monitoring outputs and ensuring transparency and explainability particularly when AI influences decisions related to benefits, enforcement, or compliance.

In 2026, action will no longer be deferrable. Delayed action will only increase exposure, not only to cyberattacks, but to service disruption and erosion of public trust. Read how organizations can balance security with public sector delivery.

Trend 3: Modernization is at a decisive juncture

Modernization has been happening for two decades now, but 2026 will be a turning point. Because the cost of inaction outweighs the cost of change, especially as ageing systems are increasingly incompatible with modern service expectations. Legacy, monolithic systems continue to stymie AI adoption, cybersecurity resilience and accessibility compliance.

Modernization efforts in the public sector have historically been perceived as expensive, complex and disruptive, but today’s advanced technologies are changing that equation and simplifying transformation. AI-assisted development, modular architectures, cloud-native platforms, SaaS solutions and APIs allow agencies to modernize incrementally rather than through risky, large-scale replacements. Leaders are shifting from infrastructure-centric thinking to treating cloud as an operating model, with governance, cost controls, security and interoperability built in.

In 2026, modernization must move beyond technology refresh to fundamentally re-shape how government operates so it can adapt, withstand disruption and deliver measurable outcomes. True modernization enables agility, resilience and outcome-driven execution—creating the foundation to responsibly scale emerging technologies like AI. The imperative for state and local leaders is clear: treat modernization not as an IT upgrade or initiative, but as a mission imperative-– aligning technology, data and operating models to produce real, lasting impact for the citizens they serve. Listen to the need to shift toward measurable modernization.

Trend 4: Digital services to pivot from efficiency to equity

Citizens now expect “Amazon-like” responsiveness and experience from every provider, government notwithstanding. Yet public sector investment in citizen experience (CX) remains cautious.

While most public sector leaders recognize AI’s potential to transform engagement, improving citizen experience has yet to become a primary focus of AI initiatives. Efforts remain largely concentrated on internal efficiency, a pragmatic starting point, but not enough when customer expectations are on the rise.

The Department of Justice’s accessibility mandate, effective April 2026, makes accessibility and inclusion non-negotiable. Meeting this requirement will demand more than surface-level fixes. It will require modernized platforms, cloud-based architectures and security-by-design approaches that support accessibility across web and mobile services from the outset.

As agencies modernize, leaders are beginning to leverage agentic AI to deliver more personalized, proactive and inclusive citizen experiences, signaling a shift toward digital services that are not only accessible, but also secure and scalable.

In 2026, leaders must move beyond surface-level digitization and embed accessibility, usability and equity into service design. Discover the work we do from building community, streamlining public transit, responding to emergencies and teaching with AI.

Trend 5: Fiscal management will mean ROI-driven technology decisions

In 2026, fiscal management will be one of the CIO’s most visible leadership responsibilities. AI, modernization, cybersecurity and digital services will no longer be discretionary investments but rather, interdependent levers for delivering efficiency and value. CIOs will be expected to make hard trade-offs: scaling AI where it delivers measurable impact, modernizing platforms to reduce technical debt and cyber risk, and prioritizing digital services that measurably improve outcomes.

Fiscal discipline will no longer be about cost containment alone; it will be the mechanism through which CIOs drive efficiency, resilience, and long-term value across government.

2026 is a pivotal year

The convergence of rapid AI advancement, escalating cyber risk, fiscal pressure, accessibility mandates, and rising public expectations makes 2026 a defining year for state and local government. For CIOs and technology leaders, the imperative has shifted from whether to modernize to how quickly modernization can be converted into measurable public value. Agencies that act decisively in —strengthening modern foundations, operationalizing governance, embedding security and accessibility by design, and scaling AI from pilots to platforms —will set the standard for public service delivery in the decade ahead. The infrastructure is ready, the mandate is clear, and the opportunity to lead is now.

Learn more.

From readiness to results: Five public sector trends defining 2026

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Beth Howen

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