Municipalities First

When people encounter the state, they usually encounter the municipality: when registering a place of residence, applying for a childcare place, filing a building application, having their waste collected, or registering a festival. In our book Der selbstfahrende Staat (Springer Gabler 2024, in German), the federal level takes center stage, because that is where the laws and the large data pools are. For implementation, however, we consider the municipality to be the best starting point. This article explains why, shows what municipalities need from the state and federal levels to get there, and describes where they can start today.

Where the state touches everyday life

In the book, we describe the structure of a federal state with the image of a pomegranate: at the center lie many municipal core competencies, a membrane holds them together, that is the states, and an outer shell protects and supplies them, that is the federal government. The municipalities, meaning cities, towns, counties, or districts, are responsible for local matters: urban planning, local public transportation, social services, waste management, education, culture. The municipal council decides, the mayor executes; there is no judiciary of its own at this level.

For people, this level is the closest one. Anyone who lives in a rural municipality has the kindergarten, school, hospital, and police station in their personal environment; the state already takes effect here and provides security, development, and well-being. The mayor identifies the concerns of the citizens and implements them locally, from new infrastructure to traffic-calmed zones to the roundabout. Of the administrative services that the federal government, the states, and the municipalities provide in the multi-level federal system, a large share is applied for, processed, and experienced in the municipality. Whether the self-driving state becomes tangible for people is therefore decided not in a ministry but at the municipal office.

Three reasons why the municipality is the best starting point

1. The procedures are simple and frequent. Registering a place of residence, allocating a childcare place, assessing a fee, registering an event: these procedures follow clear rules and repeat themselves thousands of times. That is exactly the profile that can be mapped in software. In earlier articles in this series, we showed that procedures can do without forms and without supporting documents as soon as the triggering event and the rules are known. At the municipal level, both are usually the case.
2. The paths are short. Between a citizen's request and the decision, there are only a few people in the municipal office. The head of administration, the municipal council, and the mayor can adopt a new procedure in weeks, not in legislative periods. Participation is direct as well: neighboring residents, associations, and businesses are known and reachable. In the book, we describe how participatory citizen feedback technology makes municipal services more proactive, because problems are recognized before they become acute. In a municipality, this feedback channel is not a project but everyday life.
3. The benefit is visible. A childcare place allocated without an application, or an event approved within a few days, changes the image people have of the state. In the book, we assume that the demand from the public and local businesses for more autonomous administrative processes will over time become so great that public administration will have to become self-driving. This pressure arises where the benefit is experienced: in the municipality.

Two examples from the book's service catalog show what the four evolutionary stages, analog, digital, automated, and self-driving, look like in concrete terms at the municipal level. In the allocation of childcare places, parents in the analog state appear in person at the municipal office and submit documents on paper; in the digital state, they submit the evidence digitally and see available places online; in the automated state, an algorithm assigns the places according to defined rules; in the self-driving state, the allocation takes the situation of each individual family into account. In the registration of large events, caseworkers today check security concepts manually and coordinate with police, fire department, and rescue services in meetings; in the automated state, software extracts the relevant information from the documents, assesses the risk on the basis of the number of participants, the venue, and historical data, and speeds up approval through automated workflows.

The paradox: apply yes, build yourself no

As close as the municipality is to the benefit, it is just as far from the means. We name two limitations clearly in the book. First, municipalities have no legislative power of their own; they therefore cannot pass digital legal twins either. The rules by which a municipal procedure decides come from state and federal laws, supplemented by ordinances of the municipal council, for instance on fees and levy rates. Second, it would be inefficient to build a separate software solution for every municipality. According to our estimate in the book, the one-time development costs of comprehensive administrative software already amount to millions of euros at the municipal level, plus several hundred thousand euros per year for further development and operation. As we note in the book, that would overwhelm the budgets of individual municipalities.

"Municipalities first" therefore does not mean that every municipality invents its own digitalization. It means that municipal life situations are implemented first, and implemented once, for everyone. In the book, we propose that the federal government provide the basic structure of software solutions, platforms, and interfaces as a generic workflow engine: basic administrative processes are implemented once and adapted according to specific requirements. The software adopts the rule base of the respective level, that is, the state laws and the ordinances of the municipality. For the municipalities, we propose in the book that the states or the federal government provide generic solutions that are adapted to the specific needs of the municipalities. At the municipal level, this is often done in cooperation, because development and operation would overwhelm the budget of a single municipality.

The same principle applies to data. Every municipality can keep its master data, such as the inventory of the municipal office, in its own standardized register that is released to the state and federal levels through standardized interfaces and rights management. The state thus obtains a virtual state register without any data having to move. Whether a register is held centrally by the federal government or decentrally in the municipalities is irrelevant to the self-driving state; what matters are the interfaces and a legally regulated authorization system.

The municipality is the first place of application, not the first place of development.

Magistrate and state level: where the levels coincide

Between the small municipality and the federal government lies the level at which a large share of procedures in Austria is actually handled: the district authorities of the states and the magistrates of the cities with their own statute. A magistrate combines several roles in one apparatus. It is the municipal office and the district administrative authority, and in Vienna it is also the office of the state government, because Vienna is a municipality and a federal state in one. This is where high case volumes meet a complex allocation of responsibilities.

What happens when a simple procedure reaches its breaking point in this constellation is something we described in the book using the example of Vienna's Municipal Department 35, which is responsible for immigration and citizenship. On August 17, 2021, the Austrian broadcaster ORF reported that of around 450 incoming emails, at most 120 could be processed, that telephones rang all day without being answered, and that employees burned out under the constant strain. The procedures in question, extensions of residence permits, are legally and administratively simple, but existential for those affected. The example shows that volume can bring a simple procedure to total failure, and that digitalization and automation are the only answer that allows all applications to be recorded, prepared, and processed in the future as well.

Two things follow from this for the relationship between municipality and state. In our view, the states are the natural level at which generic solutions for their municipalities are created: they execute a large part of federal law, they know their municipalities, and they have the budgets that an individual municipality lacks. And the states benefit themselves. In the book, we describe how self-driving federal states simulate the effects of a state law on the affected municipalities before it is passed together with its digital legal twin. A law whose execution in the municipalities already exists as software can be calculated through before the vote.

The hierarchy remains intact; it only becomes faster. In the book, we outline how a municipal council's resolution to build a mountain shelter in a nature preserve is automatically checked against state, federal, and EU law. In the event of a conflict, the decision goes to the next higher instance; objections from neighboring residents or NGOs are formally recorded and checked automatically, and manually in special cases. The chain of appeals is the same as today; it is just completed in considerably less time.

Where municipalities can start today

From our project practice in the public sector, five steps can be derived that do not require a comprehensive reform and that a municipality or an association of municipalities can take today.

• Rank procedures by frequency and clarity of rules. Not the most prestigious procedure comes first, but the most frequent one with the clearest rules. Residence registration, childcare, fee assessment, and event registration rank high in almost every municipality.
• Separate parameters from rules. What is actually decided in the municipality, that is, fee rates, opening hours, or allocation criteria, belongs in a shared solution as configuration, not as separate software. Anyone who documents this separation cleanly can adopt a generic solution from the state without custom development.
• Procure jointly. Joint operation, that is, associations of municipalities or shared IT service providers, is the path we describe in the book for the municipal level. One tender for twenty municipalities delivers a better solution than twenty individual ones.
• Put the registers in order. Every municipality keeps data that no one else has: inventory, zoning designations, utility connections, cemetery records. This data belongs in standardized registers with interfaces so that the state and federal levels can use it according to the once-only principle instead of collecting it again.
• Take people along. In the book, we call for municipalities to be involved in the planning, development, and implementation of the digital system, including training. This applies in both directions: the municipality must have a say at the state level, and the employees at the municipal office must master the new tools before the counter becomes the exception.

The political framework is clearly stated in the book: the self-driving state will have to distribute central budgets to enable the technological transformation of the municipalities in particular. Only by pooling budgetary resources will it be possible for 80 percent of municipal decisions to be made by software. By 2040, we expect a comprehensive change management process that convinces regional politics of the principles of self-driving municipal administration. This process does not begin with a federal law, but with municipalities that demonstrate how it is done.

The next step

The hierarchical perspective of the self-driving state, from the municipality through the state to the federal government and the EU, is described in our book Der selbstfahrende Staat. How we support municipalities, cities, and states in automating their most frequent procedures first is described on the page Public Administration.