Artificial Intelligence in Municipal Finance

Artificial Intelligence in Municipal Finance 

By: Erika Gomez - Chief Finance Officer, Three Valleys Municipal Water District 

Artificial intelligence (AI) has become a steady presence in modern life, appearing in headlines and daily conversations more frequently than ever. According to the Pew Research Center, 95% of U.S. adults say they have heard at least something about AI, and the share who say they’ve heard a lot has nearly doubled since 2022.

According to the IPSOS AI Monitor 2025, 67% of people believe they have a good understanding of AI, but about one-third may not. Before diving deeper, it’s worth clarifying what AI actually is, because while many people equate it with ChatGPT, AI goes far beyond any single tool.

At its core, AI is a field of computer science focused on creating systems that perform tasks that typically require human intelligence, such as recognizing patterns, learning from data, making decisions, or understanding language.
Public attitudes toward AI are mixed. The IPSOS AI Monitor 2025 notes that 55% of people believe AI products and services offer more benefits than drawbacks, yet 50% also say they feel nervous about them. People are optimistic about AI’s potential, but still uncertain about its risks.

Despite the hesitation, AI may be more familiar than many realize. In fact, most people use AI tools every day without thinking about it. Local governments are also embracing AI to enhance efficiency and improve service delivery. Here are a few ways:

• Invoice OCR: Optical Character Recognition (OCR) automatically extracts information from invoices and verifies accuracy. This includes information such as vendor names, dates, invoice numbers and totals.
• Chatbots and Virtual Assistants: Government agencies are increasingly deploying chatbots to answer routine questions, provide program guidance, offer 24/7 support, reduce staff workload, and improve accuracy and consistency. These tools handle high volumes of inquiries simultaneously, resulting in improved service and reduced operational costs.
• AI-Enhanced Applicant Screening: AI tools can parse resumes, filter candidates, and rank top applicants based on required skills or experience. This reduces manual review time and can also help minimize bias by applying consistent criteria.
• Generative AI Tools Like ChatGPT: ChatGPT represents a class of AI capable of creating text, images, code, and more from user prompts. It is now widely used for drafting content, summarizing information, and accelerating brainstorming.

While AI can simplify many aspects of work, responsible use is essential. Below are key best practices for employees and organizations:

• Use AI as an Assistant: Let AI support (but never replace) human judgment and review all AI-generated content for accuracy and alignment with your organization’s goals.
• Protect Confidential Information: Do not enter private, sensitive, or regulated data into AI tools unless using an approved secure platform and avoid inputting customer information or documents covered by privacy laws.
• Promote Critical Thinking: Treat AI outputs as a starting point, not a final answer. Ask whether the response makes sense and aligns with known facts.
• Keep Guidelines Updated: AI evolves quickly, and policies should evolve with it. Regularly review rules around data security, usage, and department-specific applications.
• Invest in Training: Provide staff with clear guidance on how to prompt, evaluate results, and use AI safely. Proper training reduces risk and increases productivity.

I hope this article inspires you to explore how your organization can benefit from the possibilities that AI has to offer. And before you turn the metaphorical page, I’ll leave you with this little nugget of wisdom to keep in mind as you move forward: “A computer can never be held accountable; therefore, a computer must never make a management decision.” – IBM Training Manual, 1979

Erika Gomez is the Chief Financial Officer of the Three Valleys Municipal Water District. City of San Jacinto’s Finance Director. Prior to assuming her current role, she served as Finance Director for the City of San Jacinto and General Accounting Manager of San Bernardino County. She is a Certified Public Accountant and has an MBA from California State University, San Bernardino, where she also played for their women’s soccer team. In her spare time, Erika enjoys spending time with family and friends, attending sporting events, snowboarding, reading, and watching movies.