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Harnessing AI for Local Government Budgeting: Opportunities and Challenges

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This research article examines the application of AI, specifically ChatGPT, in public budgeting for local governments. It evaluates the capabilities of different versions of ChatGPT in financial data management and policy recommendations, highlighting the strengths and weaknesses of each tool in a small Nebraska municipality context.
  • main points
  • unique insights
  • practical applications
  • key topics
  • key insights
  • learning outcomes

  • • main points

    • 1
      In-depth analysis of AI's role in local government budgeting.
    • 2
      Comparison of different ChatGPT versions for financial data analysis.
    • 3
      Practical insights into AI's potential and limitations for policymakers.

  • • unique insights

    • 1
      ChatGPT-4 significantly enhances data processing efficiency compared to earlier versions.
    • 2
      The importance of precise prompts to improve output quality in AI applications.

  • • practical applications

    • The article provides actionable insights for local government officials on using AI tools for budgeting, emphasizing the balance between cost, time, and data preparation.

  • • key topics

    • 1
      AI applications in public budgeting
    • 2
      Comparative analysis of ChatGPT versions
    • 3
      Policy recommendations for local governments

  • • key insights

    • 1
      Practical assessment of AI tools in real-world budgeting scenarios.
    • 2
      Insights into the operational challenges faced by small local governments.
    • 3
      Discussion on the balance between AI capabilities and resource constraints.

  • • learning outcomes

    • 1
      Understanding the role of AI in public budgeting.
    • 2
      Evaluating the effectiveness of different AI tools for financial analysis.
    • 3
      Applying AI insights to improve budgeting processes in local governments.
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“ Introduction

Local governments are increasingly pressured to do more with less due to fiscal constraints, labor shortages, and economic shocks. This paper investigates the potential of artificial intelligence (AI), particularly ChatGPT, as a budgeting tool for local governments, focusing on its application in financial data management and analysis.

“ The Role of AI in Local Government Budgeting

AI technologies offer significant opportunities for enhancing public budgeting processes. This section discusses how AI can assist local governments in financial management, forecasting, and policy formulation, especially in the context of limited resources and staffing challenges.

“ Methodology

The study focuses on Fort Calhoun, Nebraska, a small municipality with limited financial management capacity. We analyze the performance of three versions of ChatGPT in processing financial data, conducting analyses, and generating policy recommendations.

“ Analysis of ChatGPT Versions

We evaluate the capabilities of ChatGPT-3.5, ChatGPT-3.5 with Python, and ChatGPT-4.0 in handling financial data. The analysis includes descriptive statistics, fiscal condition assessments, and the generation of policy insights, highlighting the strengths and weaknesses of each version.

“ Findings and Discussion

The findings reveal that while the free version of ChatGPT has limited analytical capabilities, it can still provide valuable policy guidance. In contrast, ChatGPT-4.0 demonstrates superior data processing and analysis capabilities, making it a more effective tool for local government financial management.

“ Policy Recommendations

Based on the analyses conducted, we propose several policy recommendations for local governments, including improved cash reserve management, diversified revenue streams, and enhanced long-term financial planning to ensure fiscal stability.

“ Conclusion

The integration of AI tools like ChatGPT in local government budgeting presents both opportunities and challenges. This paper underscores the importance of understanding these technologies' capabilities and limitations to optimize their use in public finance.

 Original link: https://www.publicfinance.org/index.php/pfj/article/download/6/7/74

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