(TNS) -- The City of Olympia is considering using recommendations generated by artificial intelligence (AI) to help steer its future budget decisions in what's being called priority-based budgeting.
Assistant City Manager Debbie Sullivan said during the Aug. 18 Finance Committee meeting that this step is an opportunity to transform the city's budget from being divided by individual departments to focusing on programs and services.
"It helps us tell the story of what we do, why we do it, and how much it costs to do that," Sullivan said. "It also provides a framework for decision makers to evaluate how we use those resources to explore new revenue, cost saving measures and those types of things."
According to meeting information, the city contracted with Tyler Technologies to collect data on the city's budget. Data points were scored and peer reviewed, and programs and services were categorized based on impact reliance, mandate alignment and cost of programs.
The cost to the city's general fund for priority-based budgeting software and consultant support was $134,750.
Sullivan said at a June retreat, the city decided to have department directors to enter 2026 budget information. Since then, Tyler Technologies has used AI to produce a draft recommendations, opportunities and insights report, which includes suggestions for cutting costs and generating more revenue.
Sullivan said the report looks at case studies from other municipalities with similar programs and services. She said it never makes a recommendation to increase taxes as a way to bring in more money.
She said because the report is AI generated, it's the city's due diligence to review the entire 300-page report for errors and false perceptions. Sullivan said that work has been done.
"This gives us ideas to think about how we do work, it will help us prioritize opportunities, implement best practices, and continue to monitor and adjust," Sullivan said.
Programs and services were separated into 16 categories, depending on their impact, cost, mandate and reliance level -- basically bang for the buck. The AI system identified more than 30 programs as having a low impact and being costly to run.
Thirteen of the programs were labeled low impact, higher cost, low/no mandate and of low reliance. The report says the city has invested more than $27 million in these programs.
Of the high impact, low cost category, 20 city programs appear to be of high relevance for the cost, and they're required. With a monetary investment of more than $5 million, the AI system suggested finding ways to offset the mandate with cost recovery or grant funding.
Under the high impact, high cost category, 29 programs were labeled as of high relevance for the cost, and of high mandate and reliance. The system labeled this category the city's "unique core" programming, but at a high cost. The city has made a more than $93 million investment in these programs.
Sullivan said a workshop for department heads to discuss their budgets is scheduled for Aug. 26. She said it will give directors a chance to see the suggestions the AI system had, and what has already been done to save money.
She said some of the ideas were around fees for service, as well as grants and private sponsorship opportunities. For example, City Manager Jay Burney said Oly on Ice, the city's seasonal ice rink, wouldn't work without the private sponsorships the city has been able to land.
Altogether, Sullivan said the AI system came up with ways to save between $19.4 million and $28.4 million.
Burney said the city has already taken steps to cut some costs and bring more money in, and some of the things AI has suggested aren't possible in Olympia due to state law. He said the city will have to review all the recommendations to see what could be feasible in Olympia specifically.
Sullivan said the city will also review the weighting criteria and how programs were categorized, which could lead to changes in the data.
She said after meeting with department directors, staff will come back to the Finance Committee to share further results and affirm priorities. She said there will also be a council study session and further public communication about future budget plans.
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