To Save Money and Services, City Government Must Invest in Its Most Important Resource

City and state governments are entering an era of budget tightening, rising service demands, and rapid technological change. Over the coming years, public-sector leaders will be asked to deliver significant savings while simultaneously improving the quality and reach of essential services.

New York City is already feeling this pressure. City leaders recently reported a projected budget gap of several billion dollars next fiscal year. A budget gap of that size could mean fewer teachers in classrooms, longer waits for housing inspections and permitting, slower emergency response times, delayed repairs to critical infrastructure, and sanitation routes stretched thin. It also means frontline city workers could be asked to do more with less while New Yorkers feel the erosion of basic services in their daily lives.

In response, Mayor Mamdani issued an executive order requiring every city agency to appoint a Chief Savings Officer. Over the next 45 days, these leaders will assess service outcomes and identify opportunities to streamline operations and reduce costs.

A clear signal from senior leadership is an important first step, especially in a city government with more than 300,000 employees. But leadership directives alone are rarely sufficient to drive the systemic transformation needed to generate real savings, improve efficiency, and deliver better long-term outcomes.  

Securing and sustaining significant reform is especially challenging in government. McKinsey reports that 80 percent of large-scale public-sector transformations fail to meet their objectives, with common pitfalls including risk aversion, leadership turnover with short political terms, and limited cross-agency collaboration.

Too often, change is championed by a new administration that comes in with bold ideas only to be met by the beast of bureaucracy. Well-intentioned leaders may rely on top-down or outside-in strategies without fully engaging the career public servants who are essential to making reforms stick and succeed. Ultimately, as momentum stalls and ambition is narrowed by complex processes, execution becomes a test of endurance.

We have seen this dynamic firsthand. One of us began their career in City Hall, where even the most capable and innovative executives struggled with institutional and political constraints. The other has spent a career helping large corporations navigate their own bureaucracies to build cultures of continuous innovation. Across both sectors, the organizations that succeeded in driving lasting change shared one trait: they invested deeply in their people.

This is where city government too often falls short. Too often, the public sector fails to prioritize professional development for frontline employees, leaving them without the skills, tools, and authority to act as intrapreneurs within government. 

New York City employs more than 300,000 public servants, including teachers, police officers, sanitation workers, engineers, caseworkers, analysts, planners, and inspectors. The vast majority are career civil servants. These rank-and-file employees understand the operational realities of their agencies better than any outside consultant ever could.

For the city government to succeed in delivering quality services with fewer resources, it must equip these employees to identify waste, redesign processes, leverage modern technology tools and data analytics, and pilot new solutions from within. Real savings do not come from across-the-board reductions. They come from redesigning how work gets done.To advance this goal, the city government should introduce an Innovation Fellowship for rank-and-file employees. Over several months, the vital civil servants would learn to identify and validate opportunities for improvement, test and refine solutions, leverage new technologies, and advocate for implementation within their agencies. Participants would actively develop repeatable innovation pipelines and launch pilot projects that address immediate, real-world challenges. Fundamentally, the program would deliver not just new ideas, but lasting expanded state capacity for lasting change.

When budgets tighten, leaders often default to hiring outside consultants to diagnose problems. Consultants can play a role, but the knowledge required to truly modernize city government already exists inside the workforce. Whether the goal is to reform permitting, improve trash collection, or reduce traffic congestion, a sustained commitment is needed to equip the public servants who deliver those services every single day. Investing in professional development is essential to ensuring the city government’s workforce can effectively reform government and sustain core services well into the future.

Aaron Kinnari is the founder of The Future Forum, a community of entrepreneurs and executives focused on the future of New York. Tirza Hollenhorst is the founder of LUMAN, a firm that works with large companies to drive holistic change.