New report examines the growing demands on leadership navigating workforce pressures, service delivery demands, and digital and AI readiness
CALGARY, AB, May 14, 2026 /CNW/ – The nature of municipal work is fundamentally changing with artificial intelligence driving a sense of urgency. For local governments already managing workforce strain, leadership gaps, and rising service expectations, this is not a future consideration. It reflects the current reality of leadership capacity and why the conversation about the future of work is happening now.
According to the 2026 MNP Municipal Report, more than half of respondents (57 percent) say change fatigue is already affecting employee engagement and timely outcomes. The report examines how AI and digital transformation are reshaping what it means to run a local government as workforce strain, leadership challenges, and service expectations continue to stretch teams and long-term capacity.
Since MNP released its first Municipal Report in 2023, municipalities have faced increasing pressure to modernize responsibly while balancing tighter capacity, evolving workforce needs, and growing operational complexity. What has shifted is the pace. AI is accelerating the need to rethink how work gets done, how teams are structured, and how leaders prepare their organizations for a fundamentally different operating environment.
Now in its fourth year, the report captures insights from 292 local government leaders across urban and rural communities of all sizes. Developed in partnership with Leger, it offers a national perspective on how municipalities are preparing for the future of work while maintaining essential services and public trust.
Technology and digital tools remain an important part of municipal progress. At the same time, local governments are placing greater focus on workforce sustainability, leadership capacity, employee experience, and service delivery in practice — recognizing that the strongest outcomes happen when people, leadership, and technology work together.
“What we’re seeing is a more practical approach from local governments. Technology is being worked into day-to-day operations in a way that supports teams and helps them manage growing demands while keeping services moving.” says James Richardson, Partner and National Leader of Municipal Community of Practice at MNP.
Where priorities are rising
Local governments remain focused on the fundamentals: delivering strong service, managing resources responsibly, and protecting the public trust. What is changing is how those priorities are being addressed.
Cost management is now the top organizational priority, rising to 70 percent from 62 percent in 2025Customer service remain steady at 65 percentCyber security and privacy continue to rank high at 62 percent
Leadership is also moving to the forefront. More than half of respondents (58%) identified leadership and management as the most important future-ready capability, followed closely by digital literacy, including AI, at 53 percent.
Leadership and senior management also remain the top hiring and retention challenge, with 40 percent of respondents identifying these roles as the hardest to recruit and retain.
Municipal work is advancing, and the skills needed to lead it are changing too. As routine tasks become more automated, stronger leadership, sound decision-making, and resident-facing problem-solving are becoming more valuable across every department.
“The municipalities making the most progress are the ones treating AI as a workforce strategy, not just a technology project; investing in structured training frameworks that help every employee, from front-line staff to senior leaders, work confidently alongside new tools. That’s where modernization actually takes hold.” says Wendy Gnenz, Partner and National Municipal Digital Leader at MNP.
Pressure on people is affecting performance
Operational pressure is not only visible in budgets and staffing plans. It’s also being felt in employee experience, leadership effectiveness, and an organization’s ability to maintain momentum.
High workload and stress levels (53 percent) were identified as the top challenge in building and maintaining an engaged workforce.
Along with respondents pointing to budget constraints for employee engagement initiatives (50 percent) and limited career growth opportunities (42 percent), the report also found:
Leadership communication during change initiatives was identified by 43 percent of respondents as a key support practice41 percent pointed to employee training and support programs as critical to managing organizational change
These findings reinforce what many municipal leaders already know. Service delivery depends on people who feel supported, informed, and equipped to adapt.
Digital readiness is also another vital element. While AI adoption continues to grow, respondents identified using AI tools in daily work (37%) and a basic understanding of AI (34%) as the AI-related skill areas expected to have the greatest impact on future service delivery, ahead of more advanced technical applications.
This suggests municipalities are not simply preparing for new tools, but focusing on building confidence, strengthening leadership, and helping teams work differently as expectations continue to transform.
Progress starts with practical solutions
Municipal leaders are focused on making thoughtful decisions that protect service delivery, support their teams, and strengthen their communities over the long term.
The 2026 MNP Municipal Report is designed to support that work by providing practical insight into the priorities, pressures, and decisions shaping local government today.
It aligns with the values municipalities uphold every day, responsible leadership, strong public service, and solutions grounded in local realities.
At MNP, we believe local governments need guidance they can trust. The Municipal Report is one way we support that by sharing relevant research, grounded perspective, and real insight into the challenges communities are working through every day.
As workforce demands shift, service expectations grow, and digital readiness becomes more important, municipalities need more than broad recommendations. They need solutions that reflect local realities, support informed decision-making, and help leaders move forward with confidence.
Progress looks different in every community, but it always starts with well-informed decisions, strong leadership, and the confidence to move forward.
For full survey findings, analysis, and expert insights, download the 2026 MNP Municipal Report here: 2026 MNP Municipal Report
Primary Author: Katie Hayes, Digital Advisor
About MNP
National in scope and local in focus, MNP provides client-focused accounting, consulting, tax, and digital services in more than 150 communities from coast to coast. Founded in Brandon, Manitoba in 1958, we are proud to be born and raised in Canada and committed to the success of Canadian individuals, businesses, and organizations. Our advisors deliver personalized strategies and made-in-Canada solutions to help you reach your full potential — wherever business takes you.
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