As Artificial Intelligence (AI) rapidly advances, state legislatures across the country are grappling with how to regulate this complex technology. States are taking diverse approaches, with a mix of cautious observation and proactive measures.

It is no secret that AI is advancing in every aspect of our lives. Many states, including Idaho, Washington, Montana, and Wyoming, have taken a stab at trying to navigate this new and uncharted territory.

Here is a five-step approach designed to empower state legislatures to take a fiscally conservative approach to AI, maximizing its potential while mitigating risks and ensuring financial value.

Step 1: Uncovering the wasteland by identifying inefficiencies

Before harnessing AI’s power, state legislatures must first illuminate the areas most ripe for improvement. This step demands an examination of government spending patterns. This includes a meticulous effort to analyze data on program costs, service delivery, and administrative functions across all departments. Here are areas that AI can help:

Repetitive tasks: Are employees bogged down in manual data entry or paperwork? AI automation can free them for higher-value tasks, saving time and money.

Administrative bloat: Are layers of bureaucracy slowing down processes and inflating costs? AI can streamline workflows, reducing administrative overhead.

Hidden inefficiencies: Analyze wait times for business filings, error rates, and citizen feedback to uncover hidden inefficiencies that drain resources and frustrate taxpayers.

By evaluating the potential for efficiency, state legislatures can move beyond theoretical possibilities and paint a clear picture of the potential return on investment that is offered by AI. Calculating both direct cost savings from automation and improved service delivery alongside the indirect benefits of citizen satisfaction and increased effectiveness creates a compelling case for fiscally responsible AI implementation.

Step 3: Cost-benefit analysis to strike the balance between investment and savings

A rigorous cost-benefit analysis should be the cornerstone of any AI implementation plan. This analysis goes beyond simply accounting for the costs of developing, implementing, and maintaining AI solutions. It must meticulously estimate the potential cost savings generated by increased efficiency across various areas. For example, one recent report by Route Fifty’s Public Finance Update estimated that AI could boost productivity by $519 billion a year across all U.S. governments.

Step 4: Mitigating risk with proactive planning for success

While AI promises substantial benefits, responsible implementation demands proactive risk mitigation. Ignoring potential harm, such as job displacement, product inefficiency, and privacy concerns, could undermine public trust and negate the gains achieved. AI can automate repetitive tasks, allowing humans to focus on higher-level thinking, strategy, and innovation. Proactive programs can be designed to equip workers with the skills needed for new AI-driven roles. Collaboration with educational institutions and businesses is key for effective training programs.

Step 5: Building a roadmap for phased implementation for sustainable success

Building a sustainable and successful AI implementation within state government requires a strategic, fiscally responsible approach. To have a successful implementation there must be a plan in place. Don’t rush into widespread adoption. Instead, prioritize projects based on their potential for cost savings, efficiency gains, and other focus described in Step Two. Consider areas like repetitive tasks, data-driven decision-making, and fraud detection. Begin with low-risk pilot projects to test the water, gather valuable learnings, and refine the approach before wider implementation. This minimizes risk and allows for course correction based on real-world experience.

The AI landscape is vast and mostly unexplored in the public sector. It is likely that when implementing these practices, public officials will be trailblazers for the surrounding states and even the county. Harnessing the power of AI is not just about cost savings, it’s about delivering better public services and improving the lives of citizens. By using a good process, public officials can effectively put AI to work for their state.