What We Recommend for Building Better Digital Service Teams, Initiatives, and Results
There is No Unifying Theory of Change
The book Good Strategy/Bad Strategy by Richard P. Rumelt states “Good strategy works by focusing energy and resources on one, or a very few, pivotal objectives whose accomplishment will lead to a cascade of favorable outcomes.”
In every retrospective we hosted, participants bemoaned the lack of a strategy and a longer-term theory of change in their work, or “how”, tied to outcomes. No shared strategy of work and functional purpose across the federal teams – USDS, 18F/TTS, OFCIO, and beyond – led to confusion, competition for limited resources, and a focus on individual team or organizational goals rather than shared agency- or government-wide outcomes. No shared strategy for mission outcomes at the government-wide or agency level meant we heard time and time again during the retros that teams at all levels of government felt like they were missing a chance at making an even greater, deeper impact. In the absence of such shared mission outcomes, digital service teams felt like their participation was the metric for success and their activity was a substitute for long-term progress. This is emblematic of a systemic problem – digital service initiatives operate within silos, compete for limited resources and talent, and often operate at agencies that lack a clear sense of how digital service initiatives contribute to their goals, ultimately diminishing the impact.
The lack of strategy impacted not just the teammates trying to do the work, it also impacted the agencies and stakeholders digital service teams interact with. A strategy defines a set of priorities that is repeatable and accountable, making it easier to partner, delegate, and work fast; it also communicates what you don’t want to work on, transparently outlining priorities. For digital service teams, strategy was absent but should exist at multiple levels. At the highest level, it articulates the theory for how digital services contribute to societal outcomes – how digital and service design improves public health through better access to benefits such as SNAP, or simplified access to healthcare. Strategy also exists at the government-wide level, defining priorities and processes for achieving those outcomes. And at the organizational and functional level, strategy defines the logic model for how diverse teams – including crisis response, modernization, implementation, product building, and operations and maintenance – work together across government.
And now, at a moment of significant technological change and demands on government, the stakes of having no strategy at each of these levels are higher than ever. Without a clear position on AI, government won’t even get their tactics right — they’ll spend all their time debating tools instead of outcomes. A strategy doesn’t require consensus. It is a signal of what you value, and provides the concrete steps to get what you’re trying to achieve, and why — so that people can ignore it, engage with it, challenge it, or build on it.
Moving forward, the digital service community should be a part of articulating an ambitious, outcomes based strategy at each level for what we want to achieve across the country in the next 5-10-20 years; and to look at defining foundational elements that make a strategy effective: building user-centered government and how to reform our institutions to become modern, responsive organizations.
User-centered government. Digital service practitioners have spent a decade hearing firsthand what people actually want and need from government. That knowledge shouldn’t stop at delivery- it should drive the strategy. Digital service teams are uniquely positioned to define those outcomes in concrete, user-centered terms and to hold the strategy accountable to them. No strategy should be set without that perspective at the table.
Institutional (re)design. For a decade, the civic tech community launched good services inside of – and sometimes in spite of – broken institutions. Direct File worked – and yet it didn’t change the IRS. That gap between modern ways of working and working across the organization to support radical change is the opportunity to update and upgrade our government. Digital leaders have the knowledge to go further: to define what a modern agency actually looks like, how it makes decisions, how it procures, how it hires.
Defining an ambitious strategy is an urgent first step: effective strategy is built on clear, user-centered outcomes and institutions that are structured to achieve them. Placing delivery technologists at the top of our organizations to shape both service delivery and how the institutions themselves run is one of the most critical things a political leader must do. The field is navigating AI adoption, budget austerity without a framework for prioritization, and planning for the future with a radically different federal landscape. An ambitious response to this moment is worth examining on its own and we look forward to contributing and seeing what our peers discover.
As is, the Digital Government Field Cannot Scale
Over the course of engaging 100+ individuals through the Digital Services Retros project, one theme that emerged was a shared concern that the individual contributions of any one team, no matter how talented, could not scale to influence how digital services were delivered throughout the rest of an agency. While teams of talented, experienced technical professionals could turn around quality products and evangelize a few allies to their style of working, ultimately teams struggled to turn their hard-won bright spots into scalable models of working across federal agencies.
The government digital services field’s current M.O. is to rely on a relatively small and scrappy pipeline of talent who attempt to sustain their work through oral histories and few resources or tools for which they’ve managed to win temporary exceptions. Scaling quality product development and service delivery across government demands a more mature approach, replacing unpredictable patterns of work with more cohesive processes, a shared vision of quality and strong resources that support the field of civic technology professionals.
Make it as easy to hire technologists as it is to hire lawyers
Current legislation and federal civil service code stops digital service teams from being able to hire the talent they want, build or buy the tools they need, and engage with users in the manner they need to. For this reason, the civic technology field has come to rely on a series of flexibilities and exceptions in lieu of real, streamlined repeatable career pathways.
Reliance on exceptional methods (e.g., term-based hiring, ad hoc programs that get designated salary exceptions) without reforming the system to enable a streamlined and quality process for hiring is an expedient approach, but not a sustainable or scalable one.
Policy leaders, including Congress, need to stop encouraging bandaids: digital service teams were never meant to be their perpetual excuse to avoid reform. Each needs to take concerted action to align the mechanics of the executive branch with modern hiring, workflows, and procurement that force every team to reinvent the wheel.
Make it someone’s job to scale change
Everything – from hiring, to ATO (authorization to operate) processes, to onboarding and everything in between – is a one-off, making lasting change within and across agencies near impossible. Moving forward, agencies and teams need to spend a percentage of time rewiring the agency as the work happens. Service delivery is a great opportunity to model new behaviors, work in an outcomes based manner, and use momentum to make change – this should become the norm and agencies should codify these upgrades alongside delivery work. The best way should be the default way, not the workaround. One strategy to target this need is to create a scale team – a team that shares best practice and is empowered, authorized, and expected to make sure the best ways become the default way. Institutions need to learn to expect change and implement better.
Additionally, there’s no shared definition of what good looks like in government digital delivery, which means digital teams in government are effectively grading their own homework. In contrast, within the private sector, there are industry standards for service-level agreements and user experience. These aren’t necessarily uniform across every enterprise or product, however there is broad alignment of what quality delivery reflects.
Government digital teams need to define their own “industry standards” for service levels and delivery. These definitions should not pigeonhole teams into rigid processes or unnecessary metrics, but rather provide a flexible benchmark that equips teams and leaders to gauge how successful their efforts are and how they compare across government and over time. In concrete terms, this could look like expectations for down time, user satisfaction indicators, and increased uptake of services among eligible populations. These also give agency leaders a way to set expectations and give users a basis for demanding better.
Expand field resources
Even as the field grows, there is still significant work to be done to develop its size and quality through shared vocabulary, resources, training, and methodologies. Organizations like Technologists for Public Good and events like the Code for America conference are promising valuable bright spots, but the potential for building a robust, well-connected field is far from saturated.
Establishing common training and methodologies would not only make the work itself more efficient, but would also create greater worker mobility across organizations. When practitioners share a common foundation, they become more interchangeable in the best sense; technologists are able to move between roles and institutions, which in turn drives more competitive opportunities and raises the quality of the field as a whole.
We Built Digital Teams, Not Services
“Build a digital service team” they said. And they did, oftentimes with great results, change, and service delivery. Over the last 10+ years, digital service teams have added capacity to struggling agencies across the country in order to deliver critical services that may otherwise not reach their intended user. This is a worthy goal. But what was the measurement of success? Was building the team the outcome?
During the Digital Services Retros project a pattern – across all levels of government (federal, state, local) – seemed to emerge: digital service teams were set up to add needed capacity to any number of solutions or as an outcome itself. The early strategy was – land the team, expand to solve new problems.
Somewhere along the way, the digital government field lost sight of what we were solving for. The unit of success was a digital service team; the thinking was that this team of talented individuals could be put against any set of problems or outcomes. And implicitly there was a correlation between the team being the intended outcome – an agency was deemed more “mature” or complete if it housed this team. To a certain degree this worked, and this worked well.
Today, most digital service teams have a similar set of attributes:
- A digital service is typically located centrally, either reporting into the principal or CIO/CTO or COO
- Power and authorities vary greatly; generally power is derived from political capital or occasional legislation that establishes it; they rarely have authorities to hire, fire, or hold teams accountable to outcomes
- The same set of skills were hired, regardless of the intended problem at hand, or outcome
It is assumed that digital services were somewhat plug and play – your handy government Swiss Army knife. Yet, the work itself varies greatly due to the priorities of leadership, the work it is empowered to do, and the depth at which it is allowed to operate. These teams have had great impact – and also, it is time to examine other models, units, and ways of working that can complement the standard digital service team.
The needs are so disparate and each context they work in so unique, we need a wider set of models from which to draw upon on purpose, not happenstance. Agencies and leaders at all levels need to have the right model that fits their constituents’ or agency’s or legislative need, as well as their agency’s maturity.
In its current evolutionary phase, most digital service teams are stand-alone teams assigned to deliver a specific task, often embedded in the CIO or agency head’s office. It is true that top cover and leadership capital is critical for success; however, we would like to challenge this new model in an attempt to create more enduring, transformative change for end users and for agencies.
The key ingredient: organizing the work around the shared outcome of a service, rather than a functional or organizational boundary. This orientation focuses the team on the outcome and be held accountable to its delivery. Such teams are more likely to be enduring, as the services that they deliver are either embedded in statute or have a permanency. Furthermore, the funding is allocated to outcomes that are aligned to the strategic goals (and budget) of the organization, leading to more enduring change.
The Service Team
The target state: a service. Established by the UK’s Government Digital Service and developed further by practitioners like Kate Tarling, a service team is organized around a service as experienced by an external user, i.e. “file my taxes,” “apply for college financial aid,” “enroll in benefits.” It’s not a project, nor an app, nor a vendor run system – a service is a thing a person needs to do.
A service, as Tarling defines it is described from the user’s point of view; encompasses every step between the user and the outcome; crosses organizational silos; and ties directly to the institution’s goals. This is similar to the “product operating model” seen in the private sector.
Where government services depart from a typical product team are the unique constraints faced by the public sector. A private sector product team is usually a mix of engineers, designers, and a product manager sitting in a product silo. A government service team needs that, plus program and policy staff, and often lawyers who have to navigate the policy requirements alongside the technical ones. Crucially, the user of government services also usually can’t “opt out” for a competitor product; if a benefits application breaks, the user has no other option.
These differences in the staffing and user experience are significant, however the underlying logic of a persistent, empowered ownership team remains the same. The product operating model gives government the operating mechanics: how a team should be funded, staffed, and run day to day. The service model outlines the unit that the team should be organized around: the user’s full journey, rather than an IT system, or office, or budget line. Government needs both the discipline of the product operating model, applied to the full weight of what an end-to-end government service actually requires.
A few items stand out here. First, a service is an end-to-end journey. In most agencies a service team by this definition would span across multiple teams and silos in an organization. A service also completes the user’s task (and it does so confidently, securely, and accurately). And a service team crosses organizational boundaries and is fully empowered to deliver this complete, end-to-end task. Restructuring delivery around an end-to-end service, either collapsing or working across silos, allows digital to truly shape the work that matters most to users.
That last part is what makes this model sticky. A service team organized around “Renew My Passport” is less likely to be disbanded when leadership turns over, because the service doesn’t go away. Funding is allocated to an outcome, year after year. The work survives because it’s embedded in something tangible.
We don’t have to look to the UK for proof of concept. An independent assessment of the IRS conducted in 2024 described Direct File as already ‘functionally operating as an isolated service-oriented organization.’ The model worked well and was proving itself across the organization for two prominent reasons. First, the most important decision the Direct File team made was to appoint a single accountable owner empowered to make day-to-day decisions. This leadership and governance model allowed the team to work in an empowered manner, at pace. Second, the service team joined up customer support and product teams.
What we heard in the retros was the flip side of that: projects that stalled because of indecision, too many stakeholders, being dropped into ambiguous situations without clear ownership, among other reasons. Building end-to-end service teams is not for the faint of heart – achieving this model of embedded technical and program teams, working collaboratively on an end-to-end journey, fully empowered to update processes and ways of working as they go is the mature end of the digital government spectrum. But it is included here as it not only achieves better results for the end user, it also helps the agency and staff transform as they work in a new, fully digital, collaborative manner.
Different Models for Different Problems
Not every new challenge in government requires the same organizational response. During our retros, participants bemoaned how USDS and 18F didn’t often build the right team for the problem they were trying to solve. This was often due to multiple reasons, top among them scarcity of talent. Below are models and purposes that emerged from our retros, each with distinct purposes, skill requirements, and conditions for success. These aren’t mutually exclusive; a mature digital organization will likely need more than one at once. The service team is the north star, the most mature model. The others are legitimate and necessary, but they should be chosen deliberately and not defaulted into.
Additional models for teams that could be applied to different problems, include:
A Forward Looking Agenda for Digital Service Delivery
This is the moment for ambitious change. The digital government field has an opportunity to build a more responsive and resilient government by pushing into expanded frontiers, with new tools, approaches, and even organizations that don’t exist yet. While the pace of change can be overwhelming, there is something clarifying about a moment when people are questioning the value of institutions themselves. This is the time for radical experimentation, delivery, and exploration.
So what’s next? The recommendations we’ve laid out – building a coherent strategy, matching the right team for the right problem, and scaling what works to stabilize and reposition the field can be read through multiple future-looking lenses. First institutional: what does building ambitious and capable government institutions look like, and how do you build it? Another is contextual:, trends like artificial intelligence and austerity are both going to reshape what’s possible and not in directions we can easily predict.
The following options and ideas exist on a spectrum, and are part of a suite of reform ideas that can help build government with the ambition and capacity to deliver. We welcome challenge, debate, and more ideas to this dialogue – love or hate it? Great! Tell us! Like an idea? Great! Steal it and go deeper!
Federal Digital Service Delivery
Building ambitious and capable government institutions – Federal edition
Federal capacity, or “The Department of Digital”
Federal digital and delivery capacity will continue to be a necessary piece of a strong, delivery oriented government. The question is – now that the US Digital Service has become DOGE and 18F is dismantled, what should the future model be?
The federal government needs a strong, centralized digital capacity responsible for three distinct purposes: capacity to deliver on presidential priorities, setting standards for better delivery, and building and managing shared platforms that can be used across government to save both government and external users time and money. For inspiration on what this centralized structure could be in a federal system, we look to Germany and the UK.
Germany’s recently established Ministry for Digital Transformation and Government Modernisation is delivering a portfolio of services, holding agencies across the government accountable for excellent, modern services, and ensuring that all software that is developed is interoperable across agencies and to devolved jurisdictions. It is a priority of the German government to build software that can be reused not just across the central government, but to states as well. Embedded in the ministry is a 250+ strong digital service team, responsible for excellent user experiences and digitizing the key interactions with government.
Germany is also taking the software it uses seriously and, in an effort to ensure national sovereignty over their own technology, is setting out to build their own full stack office software, across document management, presentations, collaboration suites, and other essential office software for use by civil servants across the country. It has become a national priority to not get locked into any single vendor or be reliant on any single country to provide software or cloud services; building resiliency across the tech stack is a strategic national necessity, not an afterthought.
The UK’s Government Digital Service (GDS) established a central team that builds platforms that can be used across government and sets standards that all new services must meet before they launch. These standards ensure consistent design and interaction patterns, end-to-end transaction completion, and more. The central team also builds shared platforms – GOV.UK Login, Pay, Notify, NDX Cloud, and Design System. More recently, they began developing shared open source frameworks to support local governments across the country. These platforms have become an essential foundational layer for the modernization of the UK’s government; the central team has many tools and templates that are easy to use, replicate, and apply to launching new services.
In the U.S., a central digital department could truly hold agencies accountable and help drive the momentum for change across the federal government, as well as support, build, and launch critical government platforms. Additionally, identifying and setting shared standards that not only establish a baseline for experiences, but also come with muscular authorities to enforce and hold teams accountable to those standards. What does accountability look like in practice? Agencies having their services assessed and getting approval before launching a new service experience, as the UK does now.
Recommended additions to the U.S. toolkit
Example standards. Standards that define what good looks like and come with the authority to enforce it could include:
- AI in practice – guidance for application and usage
- Service standards – design, interaction, call center, and service completion standards
- Budget controls – oversight over digital and tech procurements
- Service performance standards – transparency into service performance across government
Example platforms. Platforms any agency or jurisdiction can plug into, rather than procuring their own version from scratch. These could include:
- Login.gov
- A payment platform
- Income verification platform
- AI LLMs for civil servants that are compliant with federal and state laws (for example, Berlin’s BarGPT for Berlin city government employees and is GDPR compliant)
- Open Source office software (for example, France’s Lasuite) and code (for example, U.S. Web Design System (USWDS))
- Identifying projects similar in nature and scope to Ukraine’s Diia
Federal agencies – models for services and more
At the agency level, there are multiple models to support service delivery and leaders should support the model that meets their needs. However, almost universally we recommend that agencies should explore the service model for their key services. This model organizes teams and the work around the shared outcome of a service, rather than a functional or organizational boundary. Working across silos, in multidisciplinary teams leads to better outcomes for users and helps transform the organization into a more modern, responsive one along the way.
State and Local Digital Service Delivery
Building ambitious and capable government institutions: Working across federal and state/local
Federalism, what is it good for?
Federalism is great for ensuring power doesn’t get too centralized when managing a huge and hugely diverse country. However, federalism is rarely good for the end-user experience or for delivery efficiency. A review found that federal legislation meant to quickly build infrastructure, support cities and states during COVID, and pave a path towards a greener country was slow to get out the door and make tangible. The matrixed delivery of federal -> state -> city/local doesn’t always support efficient implementation, and it also doesn’t have to be this complicated.
An ambitious federal digital strategy should include consideration of the complete delivery cycle – inclusive of legislation, the disbursement of funds, tracking all the way down to the front line and ultimately the intended end users. There are two potential areas to explore for better outcomes – a ‘middle layer’ of shared open, public infrastructure that helps budget-strapped state/local governments deliver on key services and the inclusion of state/local digital capacity to support implementation of any legislation that requires a user experience.
A menu of tools: open source platforms, shared infrastructure, and public options
There are countless examples of large IT vendors building the same product, poorly, for 50 states. This model can and should be reimagined – moving towards a vision where governments can opt-in to a shared public infrastructure. It is time to look at options that tie federal outcomes to delivery intent: We need shared public infrastructure around key legislation and universal platforms. These could support both internal government efficiency and end-user experience.
Shared open source platforms and digital infrastructure can provide government teams across the country with additional options for delivery at a national scale. This ‘middle layer’ would look at services that are required in multiple jurisdictions or infrastructure necessary to implement new legislation. Such platforms could exist as a public option – government-provided services that coexist with one or more private options.
Governments shouldn’t have to build from scratch: Modern income verification infrastructure really only needs to be built once and made available to jurisdictions that opt-in and could be used in a countless number of ways, from federal scholarship applications to SNAP. Governments at all levels lose money to payment processing fees. A public option payment platform would cut costs and add a new competitor to the market, saving taxpayers money. Universal moments, such as birth and death registry, could be built centrally and deployed locally. Even when state and local governments build their own services, government registries and digital services could be built using a government-managed open-source low-code platform, like is being done in Ukraine with Diia.Engine.
To date, these delivery challenges have been too onerous to tackle. States are often reluctant to share data and platforms. Some jurisdictions have begun planning shared procurement strategies, but radically different, outcomes-based delivery will take reimagined governance and significant political will.
State and Local delivery capacity
State and city governments are the source of many peoples’ daily experiences with public services and infrastructure. Yet most lack the resources and capacity needed to deliver the efficient, seamless, and intuitive digital experience that the public has come to expect in the private sector. This gap is not a reflection of ambition or effort at the state level, but the result of long-standing structural constraints on funding, talent, and technical support.
Existing federal funding mechanisms and technical assistance programs are insufficient to close this gap. While federal dollars often support state IT projects, they rarely come with embedded technical capacity, hands-on delivery support, or durable mechanisms for knowledge transfer. Today, states face persistent challenges recruiting and retaining digital talent due to rigid hiring systems, compensation constraints, and limited professional development pathways.
From this, we propose a couple of options to close the capacity experience gap between the end user and state and local institutions.
- Include implementation or service teams as part of legislation to ensure that delivery intent is actually possible and is critical to the success of any legislation. Building that capacity in-house, in the institution that is responsible for the end-user interaction, is a critical step towards a successful implementation.
- Centrally funded technical assistance – in this model, a dedicated central office in the federal government – should be established to provide consultative and technical assistance to state governments at scale. This office would form interdisciplinary teams that consist of state government employees and technologists who work on high impact issues of service delivery, ranging from social safety net access, to environmental permitting, to shared digital infrastructure modernization.
Artificial Intelligence Risks and Rewards in Digital Service Delivery
AI was not a major topic during the retros, largely because many practitioners view AI as one of many commercially available technologies that can be deployed to solve problems. However, interest in AI is growing as governments increasingly experiment with and deploy AI in their operations and service delivery.
AI, when deployed responsibly and with a clear purpose in mind, has the potential to assist in streamlining benefits, reaching citizens with timely information, and automating certain tasks. However, AI does not exist in a social, economic, or political vacuum and carries significant risk to governments and the general public through cybersecurity vulnerabilities, data privacy risks, entrenched bias, intellectual property infringement, and more. These risks highlight the need for a well informed government workforce, and additional in-house technical experts within government to support users and make decisions that advance progress with a robust understanding of the implications.
Artificial Intelligence in the age of austerity
During periods of financial uncertainty or recessions it can be challenging to make the case for AI adoption when it weighs against more urgent needs. Additionally, nationwide, states, counties, and cities are facing tighter budgets due to existing deficits and a change in federal funding. Resource- and capacity-constrained institutions are turning to AI to help fill that gap and deliver for their constituents. But to ensure that AI adoption is fair and transparent, governments need AI strategies and strong, technical talent embedded to deliver on this new technology.
This moment demands confronting a reality that is complex, rapidly evolving, and where just about every decision will have a profound impact on the lives of those the government is meant to serve and the institutions themselves. If the government and the civic tech community are not intentional about how we design, procure, use, and govern this new technology, it has the risk of making capacity issues worse and undermining trust in institutions that are already fragile.
Artificial Intelligence, practically
In this moment, our recommendations – have a strategy tied to outcomes, build embedded multidisciplinary teams, make it easy to build and sustain this capacity – are more important than ever, as AI becomes a critical tool that governments across the country are rapidly adopting. AI can help improve service delivery when applied to specific problem-driven use cases and deployed in ways that promote fair, user-centric, and transparent application.
Where we would deploy AI towards service delivery:
- Embedding in the practices of front line employees, to understand where processes can be automated, notes transcribed, and the right approach to using LLMs that allow employees to save time on notes, searching and applying different policies, etc, ultimately allowing them to spend more time with clients.
- Prototyping new experiences, forms, and interactions – normally these are interactions that require lengthy procurement processes, now governments have the opportunity to use new AI tools to perform exploratory work.
- Other problem-driven uses that focus on solving specific challenges rather than adopting technology for its own sake.
- With content support across translation, transcription, simplification.
Principles:
- Build with, not for – build systems that complement the lived experience of the government employee and meaningfully include end-users in the design and testing of AI platforms.
- Be transparent around how and when AI is used, especially in decisionmaking processes or in the provision of benefits.
- Best practices include: public use-case inventories, and consumer notification/disclosure of AI use (and where)
- De-bias, wherever possible – Understand how LLMs have certain biases and how, as government employees, there are frameworks around those biases to mitigate potential risk or harm.
- Being aware of existing applicable laws, and of increased compliance risk with AI tools that have limited interpretability or control over data inputs (such as adverse action notices that are required under FCRA/ECOA)
- Pre-deployment planning: Before you deploy, understanding how it is best used, and situations in which in can actually make things work less well (i.e., when you need factual information)
- Preventing buyers remorse: Clear procurement guardrails that include sunset provisions, and auditability/interpretability (to prevent accidental bias).
- California is a great example. The state piloted multiple programs to improve service delivery and killed the ones that didn’t work or were too costly.
- Preventing buyers remorse: Clear procurement guardrails that include sunset provisions, and auditability/interpretability (to prevent accidental bias).
- Consistent quality control: As agencies independently acquire a growing number of services, maintaining consistent quality control and oversight becomes increasingly difficult. A centralized review and governance function should evaluate and monitor the tools and services being adopted across agencies. (i.e., a FEDRAMP process for AI)
- Centralized vetting of AI models and products ensures consistent standards and is more effective than fragmented (and often more expensive) agency-level procurement.
The platforms and models that we choose matter. Again, there is inspiration to be found abroad. The Swiss Euria GPT is fully powered by renewable energy, and all heat produced by the platform’s data centers is fed back into Geneva’s heating network; furthermore, it does not collect or train its models from any user data and is fully compliant with Swiss data and privacy laws.
While the future holds seemingly unlimited uncertainty, there is a lot of opportunity to learn from what’s come before and to radically redesign the future of digital government.
CELS Playbook: Clean Electricity for Local and State Governments
State and Local Actions to Make Government Work for People, Reduce Utility Bills, and Deploy Clean Energy
Elected leaders across the country are staring down interlocking crises. Families and businesses are struggling to pay skyrocketing utility bills. Large new demands are straining the grid and overtaking the buildout of new power plants. And the public’s faith in government has hit new lows. We need a new playbook to solve these problems and make the government responsive to peoples’ needs.
What’s going wrong?
Utility bills are rising rapidly for households and businesses due to an administrative state ill-equipped to protect customers from costs and risks. The cost of power supply is increasing due to growing demand, long timelines to build new cheap clean energy, and volatile natural gas prices. Utilities are spending more money on the transmission and distribution grid for both maintenance and recovery from wildfires and other disasters. Today’s regulatory construct allows utilities to drive spending decisions and pass on all these costs to customers, and regulators are under-resourced and unwilling to find alternative solutions.
Meanwhile, we are not building clean energy nor upgrading the grid fast enough to meet demand growth and address climate change. And this problem will get worse as power-hungry data centers connect to the grid and electrification of buildings, vehicles, and factories adds additional electricity demand.
The old climate policy playbook is not equipped for this moment. While it has driven significant deployment of low-cost clean energy, it was not designed to address non-financial obstacles to building projects and upgrading the grid nor to fully mobilize the suite of finance tools needed for the energy transition, nor to demonstrate that the government can make peoples’ lives better, now and long term.
Where do we go from here?
Policymakers and advocates need an expanded playbook. One that addresses the full set of barriers impeding financing and construction of clean energy and grid modernization projects. One that targets the root causes of high energy costs. One that reworks the administrative state to make government work for the people.
FAS, with the help of partner organizations spanning ideology and function, launched the Center for Regulatory to Ingenuity to build a vision for a government that is agile and responsive and delivers affordable energy, abundant housing, and safe transportation for all Americans.
As part of this work, we have developed an updated set of policies and actions for state and local leaders to meet this moment. We started by identifying the barriers to deployment and the flaws in the old playbook, published in our report Barriers to Building. Now we are developing the “plays” in a new playbook—tangible actions that state and local leaders can take now to make near-term progress and pilot new solutions. These plays will live on this landing page, which we will continue to update with additional actions.
This playbook is not a laundry list of policies but rather a cohesive strategy to achieve two goals: (1) deploy the clean energy and grid upgrades necessary to make energy affordable and combat climate change and (2) create governments that tangibly improve peoples’ lives.1
Contents (click to jump to a section)
- Main Character Energy: Make Regulators Main Characters in Planning and Ratemaking
- Improve State Government Responsiveness to Clean Energy Projects
- Build Administrative Capacity to Plan for an Affordable & Reliable Grid
- Fix Broken Incentives to Expand Distributed Energy Resources
- Wield Creative Finance Tools to Drive Investment and Reduce Capital Costs
Main Character Energy: Make Regulators Main Characters in Planning and Ratemaking
Utilities and their regulators are responsible for major decisions about what infrastructure we build and how much people pay for energy. Utilities—which can be owned by investors, the public (e.g., municipal utilities), or members (i.e., electric cooperatives)—conduct detailed analysis and provide proposals on planning and ratemaking to their regulators. The set of solutions below focuses on investor-owned utilities, who are incentivized to prioritize projects that maximize the returns for their shareholders. As a result, they underutilize solutions that could save customers money but do not earn companies a profit, like rooftop solar or technology-or maintenance-based upgrades to existing transmission lines.
In a well-functioning system, regulators—whether Public Utility Commissions (PUCs) or locally elected officials—would rigorously interrogate utility analyses and direct the utilities to shape or revise their proposals to maximize benefits to the public at lowest public cost. This lens is needed to ensure that utilities are spending money wisely in the public interest and prevent unnecessary bill increases from overspending on the wrong solutions. Active regulators are also needed to incorporate long-term considerations in planning and ensure consideration of strategies that provide long-term benefits. However, regulators are often not well-equipped or politically willing to conduct detailed analysis and push back on utility proposals. Other intervenors, like consumer advocates and environmental organizations, are outspent by the utilities, who can recover the costs of their analysis and interventions through customer bills in most states.
The result is a reactive, short-term-focused administrative state that leaves the public frustrated. Regular people are frustrated with skyrocketing bills, clean energy companies are frustrated with slow processes and broken incentives, and both are frustrated with the government’s ability to solve big problems. The administrative state itself—the officials and staff who make up regulatory body and state and local governments—are also frustrated with their perpetually reactive role and with limited say in outcomes.
We should not accept the status-quo regulatory process as a given. As representatives of the public, regulators should have both the ability and motivation to actively drive toward an abundance of cheap clean energy, affordable bills, and a modernized reliable grid. Achieving this vision requires the right personnel, clear direction and support from governors, and adequate analytical capacity.
Solutions
I. Direct Regulators to Use All Tools to Lower Energy Bills and Deploy Clean Energy (Governors and Legislatures)
When regulators take a backseat and let utilities drive, they narrow the toolkit of resources that can help meet demand and as a result leave savings on the table. Regulators with a mandate to prioritize affordability and clean energy buildout can reduce bills by both better scrutinizing utility plans and taking a more active role in enabling clean energy deployment. This includes finding creative tools to get more out of the grid through distributed energy resources, alternative transmission technologies, and flexible sources of demand like electric vehicle charging and factories with electric appliances.
Governors can direct PUCs to audit utility investments to find opportunities for savings, re-evaluate utility business models and incentive structures, consider distributed energy resources and alternative transmission technologies in planning, and consider climate impacts in planning and ratemaking decisions.
Legislatures can set statutory requirements for PUCs to consider these opportunities and expand their mandates to include clean energy goals and highest net benefit criteria.
Legislators can require PUCs to find savings across the gas and electric systems, including by using beneficial electrification to reduce costs.
In 2021, the Maine legislature directed the PUC to consider emissions reduction targets and equity impacts in regulatory decisions.
Oregon Governor Brown directed its PUC to integrate the state’s climate pollution reduction goals and promote equity by prioritizing vulnerable populations and affected communities.
New Jersey Governor Sherrill directed the PUC to review utility business models and assess whether they are aligned with cost reductions for customers.
In 2024, Minnesota S.F.4942 mandated that the PUC establish standards for sharing utility costs for system upgrades, ensuring fair cost-sharing and advancing state renewable and carbonfree energy goals along with provisions for energy conservation programs for low-income households.
II. Even the Playing Field by Providing More Resources to the PUC and Consumer Intervenors and Increasing Data Transparency (Governors, Legislatures, and PUCs)
Electricity rates are determined by proceedings called rate cases, in which utilities submit proposals and justifications to regulators, other intervenors (such as consumer advocates, environmental organizations, and state and local elected officials) submit testimony, and the regulators hold hearings and make a decision. Most rate cases end in settlement agreements between the utilities and other intervenors, facilitated by the PUC. Utilities drive this process—they file initial proposals and have more information about their system than other participants. Well-resourced PUCs and public interest intervenors are important to interrogate utility proposals and ensure that settlement agreements are a good deal for regular people.
In order to take on more responsibility in grid planning and utility oversight, PUCs need additional staff and analytical capacity. For example, a legislative commission in Texas found that the PUC needs more staff and resources to independently analyze utility sector data and provide sufficient oversight to ensure reliability. Funding for staff and analysis has a great return on investment—state leaders can save customers money and get better outcomes for a relatively small price.
Moreover, consumer advocate intervenors are typically underfunded compared to utilities and so cannot compete with utility proposals. This disparity in funding places consumer advocates in a position of exclusively reacting to utility requests, rather than having the bandwidth to interrogate existing system inequities or to develop potential innovative solutions to address ratepayer needs. Utilities also determine the pacing of their rate case applications, which can put consumer advocates even more on their heels. For example, in a 2019 rate case in Colorado, Xcel Energy brought 21 witnesses, while only a few consumer advocate intervenors testified.
Utilities in most states can recover the full costs of analysis and intervention legal fees from customers, giving the utilities significant resources to drive the process. States can prohibit this practice, directly reducing bills for customers and reducing utility influence over the process.
In addition to resources for PUCs and intervenors, data transparency can help even the playing field. Utility data are often difficult to access, embedded in filings that often run thousands of pages, and not standardized. This lack of data transparency makes it difficult for PUCs and consumer advocates to track utility spending and effectively intervene in rate cases.
Legislatures can provide additional funding for PUCs to hire additional staff and conduct independent analysis.
Legislatures and PUCs can prohibit utilities from recovering the costs of political activities from customers and limit the amount of legal fees that are recoverable from customers.
Legislatures can establish mechanisms to ensure that low‑income, consumer, and environmental justice advocates can participate meaningfully in PUC proceedings. Several U.S. states have implemented intervenor compensation programs or similar initiatives that reimburse reasonable costs for nonprofit organizations and community groups engaged in utility regulatory processes.
PUCs can charge utilities to fund independent analysis of utility proposals on behalf of customers.
PUCs can assess their processes with an eye toward reducing participation barriers for non-traditional docket participants, such as groups representing low-income or environmental justice communities.
PUCs can standardize reporting on utility costs and increase data transparency both during and in between rate cases.
Governors can direct agencies to conduct analysis to inform PUC proceedings and hire technical talent to engage with the PUC. Legislators can authorize and fund state agencies to conduct independent, proactive analysis to inform PUC proceedings, with opportunities for public input on the analysis.
California passed AB 1167 in 2025 that put an end to the use of ratepayer funds for political lobbying and strengthening enforcement against investor-owned utilities (IOUs) that illegally use ratepayer funds.
A 2023 Colorado law prohibited utilities from charging customers for lobbying expenses, political spending, trade association dues, and other similar activities.
In Illinois, a 2021 law expanded the Consumer Intervenor Compensation Fund to compensate consumer interest intervenors in planning and rate cases.
The Oregon PUC provides both Intervenor Funding and a dedicated Justice Funding program, supporting groups representing environmental justice communities and low‑income customers, with clearly defined funding caps for eligible participants.
Improve State Government Responsiveness to Clean Energy Projects
To build a clean energy project, developers must navigate a complex mix of state environmental permits, local and/or state siting approvals, and utility and grid operator interconnection processes. While federal permitting reform receives the most attention, most clean energy projects do not require federal approval and often get stuck due to state processes and local restrictions. For example, 73 percent of wind and solar projects that faced opposition in the 2010s were contested only at the state and local level, not federally.
In many places, these federal, state and local processes are not working for anybody—the clean energy developers who seek to build projects, the local communities in need of jobs and economic development, and the families and businesses struggling with rising utility bills.
What is going wrong? State agencies are often stretched thin, and outdated processes make it difficult to respond quickly to new projects. Most states lack a single designated authority at the state level who can oversee and enforce timelines. Permitting approvals often involve regional offices who take different approaches, increasing complexity and uncertainty for developers applying for permits. Inconsistent decision timelines increase risk for projects, raising costs.
In most states, local governments have control over siting, and each municipality has different processes and requirements, adding complexity for developers. Most states also lack a state authority that can ensure local governments do not unreasonably block or delay projects. About 20 percent of U.S. counties now have formal restrictions on clean energy projects.
State and local leaders can play a critical role in addressing these challenges. Governors can target agency capacity where it is most needed and legislatures can complement these efforts by funding permitting offices, creating statutory timelines to standardize reviews, and giving them enough decision-making power to actually meet those deadlines. State governments can leverage their capacity to evaluate costs, risks, and benefits—across timescales and geographies—of projects to inform decisions. Local governments can similarly improve and standardize their processes and support state implementation.
This brief focuses on a subset of solutions that help states be more responsive to clean energy projects. These solutions expand and improve government capacity to build clean power faster, lower utility bills, and demonstrate that the government can be an active and effective partner in solving problems.
Solutions
I. Increase Permitting Certainty and Consistency (Governors and Legislatures)
Uncertainty and inconsistency in permitting processes increases costs and delays projects. Timelines to hear back from an agency might vary considerably from one project to another, which adds uncertainty to project timelines. Some review processes are run by regional offices which may take different approaches to project evaluation (e.g., using different assumptions for modeling the impact of a project) and mitigation requirements. As a result, the same developer might go through a bespoke process for two very similar projects in different parts of the same state.
In addition, the scopes and goals of state environmental laws are often outdated. For example, environmental review often does not consider system-wide effects or second-order emissions impacts. As a result, environmental review often gets stuck on project-by-project analysis and lacks an overarching vision for the system.
States can address these issues minimal to no cost and without sacrificing the quality of environmental review by increasing certainty and consistency of permitting processes, centralizing capacity to run processes across agencies, and adjusting the goals and scope of environmental statute to include system-wide impacts and overarching climate goals.
Governors can issue clear guidance and standard operating procedures for analysis of impacts for different clean energy project types required under different laws (e.g., state clean water or environmental review statutes) and set timelines that agencies must follow for review and decisions.
Governors can set clear permitting goals for agencies and empower the “machinery” expertise (e.g., staff engineers, lawyers, environmental specialists, etc.) to meet those goals. Governors can also develop programs to upskill existing staff to expand the technical capacity needed for permitting operations.
Governors can issue guidance on mitigation requirements that projects can take to shorten review.
Legislatures can also set statutory decision timelines and limitations on what impacts are considered to further increase certainty for projects. In some cases, legislatures may need to provide agencies with the authority and resources required to standardize mitigation requirements and speed up timelines.
Legislatures can re-align the goals and requirements of permitting statutes and environmental review to prioritize system-wide goals.
Legislatures and governors can exempt certain clean energy projects from state environmental permitting or create simplified permitting pathways for such projects.
Legislatures can mandate and support adoption of instant digital permitting for distributed energy resources located at homes and businesses, drastically reducing the cost to install rooftop solar and energy storage.
Governors and legislatures can consolidate agency authorities, reducing the number of process steps for developers and conflicts between agencies.
In Pennsylvania, solar developers must obtain a stormwater permit from the Department of Environmental Protection (DEP), a process that involves working with regional conservation districts on stormwater analysis and agreement on mitigation requirements. Developers have struggled with inconsistent approaches among conservation districts on modeling assumptions and mitigation requirements. In December 2025, DEP issued updated its Solar Panel Farms Frequently Asked Questions to clarify key analytical inputs for solar developers and will increase consistency in conservation district approaches.
The New York State Legislature passed the Accelerated Renewable Energy Growth and Community Benefit Act, mandating specific timelines for permit reviews, consolidating authority across agencies, and providing funding to support dedicated staff. This statutory framework has significantly reduced approval times for large-scale renewable projects.
Pennsylvania Governor Shapiro also directed state agencies to evaluate the timelines for each permitting process and set a specified maximum timeline for eligible projects by which applications will be processed.
In 2025, state legislatures in New Jersey, Texas, and Florida passed laws requiring local governments to adopt instant digital permitting processes for distributed resources.
Arizona House Bill 2003 allows utilities to replace conductors or structures on an existing transmission line without needing to apply for a Certificate of Environmental Compatibility (CEC) as long the line has a valid CEC (or has been grandfathered in) and all original conditions continue to be met.
In Minnesota, HF 4700 consolidated certain permitting responsibilities into a single law and shortened the timeline for state regulators to review and permit clean energy projects.
Texas passed SB 20 in 2005, establishing Competitive Renewable Energy Zones that smooth the process of developing and integrating renewable energy projects into the grid. This program has helped bring more than 18 GW of wind capacity online.
II. Increase Siting Certainty and Consistency (Governors, Legislatures, Local Leaders)
In most states, local governments handle siting of clean energy projects. Municipalities and counties within the same state may take wildly different approaches to siting, including different fee structures, setback requirements, public input requirements, approval processes and timelines, etc. This variability makes it harder to build clean energy projects without added benefit to communities. State leaders can improve certainty and consistency without sacrificing project quality or local benefits.
Legislatures can standardize processes across local governments, including by setting standard timelines for decisions, prohibiting excessive restrictions on clean energy projects and grid upgrades, and limiting the reasons for which a project can be denied approval.
Legislatures can move siting authority to the state level for large projects or projects that meet certain criteria (e.g., projects that create good jobs and economic benefits).
State lawmakers can create a streamlined, one-stop permitting process for distributed energy resources. This process would consolidate building, zoning, and environmental approvals. Such a framework reduces delays, lowers costs, and provides developers and homeowners with greater certainty.
Governors can develop model siting ordinances and encourage or incentivize local governments to adopt them.
Local governments can voluntarily work together to align processes.
Colorado developed a clean electricity code repository that included principles for smart local code design for clean electricity deployment.
Michigan HB 5120 financially incentivizes local governments to avoid overly restrictive ordinances and creates a state-led pathway for projects to by-pass overly restrictive local ordinances.
Arizona House Bill 2019 standardized timelines for municipalities to make permit decisions and took steps to ensure municipalities are responsive, including requirements on providing contact information and communicating with permit applicants.
A bill introduced in the Oregon legislature would exempt clean energy projects eligible for soon-to-expire federal tax credits from the state’s onerous state siting process.
Hawaii’s proposed SB588 creates a self-certification and standardized permitting system for behind-the-meter solar and storage projects.
Illinois HB 4412 set statewide renewable energy project siting standards that takes supremacy over unduly restrictive local decisions.
Indiana’s SB 411 set voluntary siting standards for wind and solar power projects. If communities meet those standards, they’re pre-cleared for project development.
New Mexico’s Renewable Energy Transmission Authority established an MOU with the Federal Permitting Improvement Steering Council to improve coordination and receive assistance on eligible permitting projects.
III. Create Dynamic Agencies that Can Respond to Project Needs (Governors and Legislatures)
States should build dynamic, flexible agencies that are responsive to evolving barriers to clean energy deployment. Government responsiveness is often thwarted by limited or outdated information, poor information sharing across agencies, and lack of centralized decision-making. Governors and state agency leads often do not know which specific processes are causing delays or uncertainty for projects. Where agencies have that information, it is often not shared among agencies or with the governor’s office without intervention. Agencies often do not have the mandate or the capacity to track and share this information.
A mandate and resources to collect detailed information on project barriers, and to share that information across agencies, allows states to be more responsive to clean energy industry needs. Using this information, states can ensure that limited agency capacity is targeted where it can have the greatest impact and helps agencies anticipate, rather than react to, common obstacles.
Governors can identify the specific government processes and other barriers that are holding up projects and increasing uncertainty through direct engagement with developers and formal processes like Requests for Informations. Governors can survey developers for specific information on the failure points in the process of getting projects built, across permitting, siting, interconnection, etc. Governors can then address the critical bottlenecks by adjusting the processes that are outdated or not serving the public or shifting capacity where processes must be maintained but are moving too slowly.
Governors can build centralized processes—for example by designating a senior official as state-wide lead for permitting coordination—that can quickly respond to bottlenecks and share information across agencies. Governors and legislatures can designate a single agency as the lead on permitting, siting, and project assistance and provide that agency with the authority to make decisions. For these steps to work, governors must provide the lead official or agency with the adequate decision-making authority and capacity to run the process.
Legislators can provide the resources for the above-referenced information collection and the authority for centralized permitting processes.
The Colorado Energy Office and Department of Natural Resources conducted an extensive survey of developers, local governments, community organizations, and other stakeholders to detail clean energy siting and permitting issues and develop a plan to address them.
Following passage of HR 1 in Congress, which rapidly phased out tax incentives for certain renewable energy technologies, Governors’ offices in states like North Carolina and Pennsylvania organized inter-agency dialogue with private sector stakeholders to identify and accelerate projects that could form cost-saving federal incentives before they expire.
The California Energy Commission runs a consolidated permitting process that centralizes staff capacity to manage permitting, with specified review timelines for clean energy projects that meet certain job quality and community benefits criteria.
Washington House Bill 1216 authorized the Department of Ecology to run a consolidated permitting process to collect all relevant information from developers and coordinate across agencies to speed up review. That bill also created an interagency Clean Energy Siting Council to improve how projects are sited in the state.
In New York, Governor Kathy Hochul directed state agencies to accelerate renewable project approvals by reviewing and reforming agency processes to reduce backlogs and coordinate efforts across departments, from environmental review to project eligibility screening, focusing agency attention on projects ready to leverage expiring federal tax incentives.
IV. Speed Up Interconnection Timelines (Governors, Legislatures, and Public Utility Commissions)
Long timelines for approvals to connect to the grid and to complete necessary transmission upgrades are one of the largest drivers of project cancellations and delays. States have little control over the interconnection process for projects connecting to the bulk transmission system, which is regulated by the Federal Energy Regulatory Commission. However, states can help projects use surplus interconnection processes, which enable faster approval for projects that are using excess interconnection capacity at existing generators. States also have control over the interconnection process to connect smaller projects to the distribution grid, which is run by utilities and regulated by the PUC.
Governors can direct state energy offices proactively identify and map surplus interconnection capacity and use state procurement authority, expedited permitting processes, and incentives to encourage clean energy development at those sites. This analysis should also include sites that may have excess interconnection capacity because projects (generators or new large load sources) fell through or shut down after triggering grid upgrades
Legislatures can require PUCs and utilities to consider using sites with underutilized transmission (e.g. sites of peaking gas-fired power plants that operate very infrequently) for clean energy development.
Governors and PUCs can identify zones where load is likely to increase (e.g., due to data center deployment, electrification of ports, and heavy-duty freight trucking) and fast-track distributed interconnection for projects in those areas.
PUCs can require that utilities develop rapid procurements for clean energy resources at sites with surplus interconnection.
In California, AB 1408 would have required state agencies, the state grid operator, and utilities to incorporate surplus interconnection capacity into long-term planning, but it was vetoed by Governor Newsom.
Virginia HB 1065, introduced in the 2026 legislative session, would task the State Corporation Commission with conducting a study of available surplus interconnection potential, and requires the state’s largest utility to procure new capacity via surplus interconnection.
In Indiana, HB 240, proposed in 2026, would require utilities in their integrated resources plan to analyze how much extra interconnection capacity they have and how they can use that existing capacity to bring more generation resources online. And, it would require such analysis to be done before permitting new power plants.
V. Provide Additional Funding for Siting and Permitting (Governors and Legislatures)
Clean energy permitting delays often stem from understaffed or under-resourced agencies struggling with outdated processes and technology. Legislatures can address this by increasing dedicated funding for permitting offices, enabling agencies to hire technical staff, invest in modern permitting platforms, and reduce backlogs. Allocating funding for targeted reforms can substantially shorten approval timelines. Potential examples of such include digital permit tracking systems, programmatic environmental reviews for common project types, and training specialized clean energy reviewers. States can start by digitizing permitting processes and making it easier for projects to submit the required information. States can then collect information from developers on the processes that are causing the most difficulty and provide targeted staffing and resources to address these bottlenecks.
Governors and legislatures can digitalize state permitting processes to improve transparency and interagency workflow management.
Governors and legislatures can institute state-level digital permitting platforms.
Governors and legislatures can create shared staff resources to hire the high-demand technical expertise necessary for permitting and enable those experts to move quickly between agencies in response to need.
State agencies and legislatures can initiate programmatic environmental reviews for clean energy projects subject to state environmental review laws.
Virginia’s Permitting Enhancement and Evaluation Platform (PEEP), now expanded as the Virginia Permit Transparency (VPT) system, was enacted by executive order. The VPT provides a public dashboard to track permits through state processes and workflow management tools for agency staff.
The Washington State Legislature created the Clean Energy Siting and Permitting (CESP) Grants Program, providing roughly $4.85 million to local governments, tribes, and state agencies to hire staff and modernize permitting workflows for solar, wind, and storage projects. By funding technical staff and process improvements, the legislature helped agencies reduce backlogs and provide more predictable permitting timelines for developers.
In 2025, Washington’s Department of Ecology, under direction from the legislature, completed programmatic environmental reviews for clean energy projects to speed permitting application and review of onshore wind, solar, and hydrogen projects in the state.
In Arizona, digitization of several environmental permitting processes helped reduce decision timeframes by 91 percent.
Build Administrative Capacity to Plan for an Affordable & Reliable Grid
Today, the U.S. bulk transmission system faces significant constraints that limit where new clean energy projects can be built and threaten overall grid reliability. Many regions with abundant clean energy resources simply do not have enough high-voltage transmission capacity to deliver that power to population centers. As a result, developers are increasingly unable to move generation projects forward even when siting, permitting, financing, and interconnection queue positions are in place. Without new transmission capacity, interconnection backlogs grow, power costs increase, and states are forced to rely on older fossil resources simply because they are already in place.
Transmission buildout is thwarted by barriers such as long planning timelines of 7 to 15 years, route identification, environmental review, litigation, supply chain constraints, and fragmented and inadequate planning processes.
While the permitting reforms described elsewhere in the playbook would help, we won’t build the transmission system that we need without improved planning. Building transmission lines requires utilities, developers, customers, and grid operators to work together to determine where a transmission line is needed and appropriately allocate costs across different stakeholders. Without a strong administrative state that can facilitate the process and collect and share all the required information (such as congestion on current lines, hotspots of demand growth, areas with high potential for cheap clean energy, etc.), this process often fails and very rarely results in optimal expansion of the transmission system. Today, states and grid operators lack administrative capacity to conduct this planning process, which is hamstringing our ability to expand the grid.
States can build the capacity to improve planning in order to spur development of transmission lines with the greatest benefit for the public.
Solutions
I. Include Advanced Transmission Technologies in Planning (Legislatures, Governors, and Public Utility Commissions)
Advanced Transmission Technologies (ATTs) can be used to increase grid capacity on current rights-of-way, alleviating congestion and allowing for more efficient energy transfer without building new infrastructure. Utilities being able to increase efficiency and cost effectiveness of their infrastructure is especially important as load growth continues to increase across the country and raise retail electricity bills. For example, installing high-performance conductors increases the amount of electricity that can be transferred over an existing transmission line. By one estimate, reconductoring with these technologies could double transmission capacity on the current grid. Dynamic line ratings allow lines to carry more electricity when weather conditions are good, rather than defaulting to conservative limits on line capacity. Each type of ATT has its own advantages and benefits.
PUCs can dictate standards, enforce rules, conduct studies, and establish new policies that require and incentivize utilities to evaluate and deploy ATTs.
Legislatures can require utilities to include evaluation of ATTs in planning processes, conduct studies on ATT potential and deployment opportunities, and analyze ATTs as potential enhancements to new transmission infrastructure.
Governors can petition ATT rulemakings to the PUC via an executive order, can integrate ATTs into funding criteria for grid or resilience projects and direct economic development agencies to study the economic impacts of ATTs, and convene ATT task forces to set direction and collaborate with educational institutions to develop workforce training programs focused on ATTs installation, operation, and maintenance.
Utah’s SB 191 requires utilities to conduct an alternatives analysis for ATTs in IRPs and also provides language that the Commission can approve cost-recovery for ATTs if it is determined the deployment is cost-effective.
Ohio’s HB 15 requires that utilities summarize ATT evaluation in power siting board certificates and furnish annual 5-year reports on ATT deployment opportunities, including congestion mitigation studies and that the PUC evaluate the potential of ATT deployment including consultation from stakeholders via two public workshops.
Governor Wes Moore’s December 2025 Executive Order Building an Affordable and Reliable Energy Future creates a Transmission Modernization Working Group that makes ATT policy recommendations to the Maryland Energy Administration, which in turn makes formal petitions to the PUC.
Montana House Bill 729, adopted in 2023, enables the state PUC to set cost-effectiveness criteria to allow utilities to deploy advanced transmission conductor technologies and recoup the cost via their ratepayers, similar to investments in new energy generation.
II. Create a New Transmission Planning Authority (Governors and Legislatures)
Lack of coordination between transmission and generation planning creates inefficiencies and prevents smart clean energy development. In deregulated markets—and in some vertically integrated states—transmission and generation planning processes occur largely in isolation without systematic processes to align long-term clean energy expansion with major grid upgrades. While the federal government has authority to set the rules for planning regional and interregional transmission lines, state leaders have tools at their disposal to expand transmission buildout and improve planning.
Legislatures can create transmission planning authorities explicitly authorized to identify transmission corridors that can expand low-cost clean energy generation, lead on the permitting and siting of transmission lines, secure project finance, negotiate and collaborate with other states on interstate transmission plans, provide advice on transmission priorities and planning needs for the state, and enter into public or private partnerships to help with project development. These authorities must be empowered and resourced to collect all the necessary information (e.g., congestion on the existing system, load forecasts, sites of cheap clean energy, etc.) and to attract top talent with expertise in utility planning, project development, and financing.
Governors can create a transmission advisory or coordinating committee and reorganize state agencies, boards, and commissions to serve the purpose of a transmission authority or to create one.
New Mexico passed the Renewable Energy Transmission Authority (RETA) Act in 2007, creating RETA and authorizing it to “plan, license, finance, develop and acquire high-voltage transmission lines and storage projects to help diversify New Mexico’s economy through the development of renewable energy resources.”
In Colorado, SB21-072 created the Colorado Electric Transmission Authority (CETA) to plan and develop transmission lines to increase reliability and deploy more clean energy. CETA has very similar powers to New Mexico’s authority.
III. Require Integrated Transmission and Generation Planning (Governors, Legislatures, and Public Utility Commissions)
Coordinated planning is essential to ensure that transmission is expanded in the right places and that new clean energy investments can flow to areas with sufficient transmission capacity. Around 35 states require their utilities to develop Integrated Resource Plans (IRPs), which act as a roadmap for how the utility will meet future forecasted electricity demand over a specific time period. Although transmission and generation are key inputs for energy supply, they are usually not included in these plans. The result is piecemeal grid planning, as transmission providers and developers focus on smaller lines which meet near-term needs and are profitable within their own footprint.This shortcoming is a product of both process—regulators and state agencies have not been mandated to link transmission and generation planning—and capacity, where the administrative state lacks the right staff and resources to conduct integrated planning.
Integrating these processes can ensure better coordination between load and generator interconnection, a more holistic understanding and roadmap of current and future grid reliability and supply chain needs, help avoid duplicative investments and ensure costs for upgrades remain reasonable, and can lower the likelihood of stranded or undersized assets. This integrated planning is especially important in places with projected load growth, whether from data center buildout or electrification of buildings, heavy-duty transportation, or factories.
Governors can direct relevant agencies to work with grid operators, PUCs, and utilities to encourage integrated planning.
Legislatures in vertically integrated states can require utilities to conduct IRPs where they don’t already do so and further require generation and transmission planning to be integrated.
PUCs can require utilities to link transmission and generation planning.
Enacted in 2021, Nevada S.B.448 requires an electric utility to amend its most recently filed resource plan to include a plan for certain high-voltage transmission infrastructure construction projects that will be placed into service before 2029.
In 2022, a Memorandum of Understanding (MOU) between the California Independent System Operator (California ISO), the California Public Utilities Commission (CPUC), and the California Energy Commission (CEC) ensured that the planning and implementation of new transmission and other resources were linked, synchronized, and transparent.
IV. Ensure Effective Implementation of FERC Order 1920 (Governors, Legislators, and Public Utility Commissions)
Recent federal actions, such as FERC Order 1920, have the potential to be a useful tool for states if implemented correctly and efficiently. FERC Order 1920 requires long-term, forward-looking, multi-value regional planning. It was designed to improve transparency in local transmission planning, including by conducting local stakeholder meetings. Under this filing, transmission providers must produce long-term, at least 20-year, regional transmission plans at least every five years, which must utilize seven specific categories of forward looking factors, select projects based on different economic and reliability benefits, and consider the use of grid-enhancing technologies.
Governors can take a more active role with PUCs to guide their involvement in regional transmission planning processes established under FERC Order No. 1920.
State legislators can hold hearings with PUCs on how utilities, regional transmission planners, and state officials plan to participate and support regional planning and put the order into action.
In the mid-Atlantic, 69 legislators from 10 states called on PJM to implement FERC Order 1920 without delay due to the benefits of reliable, affordable and clean electricity it will bring to their constituents.
Fix Broken Incentives to Expand Distributed Energy Resources
Misaligned incentives for utilities have limited the types of technologies and solutions in play to meet demand growth and maintain reliability.
Distributed energy and grid flexibility solutions—such as rooftop solar, flexible demand, smart charging for electric vehicles, and distributed storage, as well as alternative transmission technologies—can help meet demand growth faster and cheaper than solely relying on large power plants and bulk transmission upgrades. Distributed energy resources are particularly useful in an era when interconnection delays and economic pressures on rate payers have slowed down efforts to build large-scale transmission projects and generation facilities.
Investor-owned utilities make a profit based on a fixed rate of return on certain expenditures. Utilities typically do not earn a return on distributed energy resources and grid flexibility programs so many utilities have underinvested in these solutions and underutilized them for grid planning.
Largely because of these broken incentives, there’s a lack of capacity to value, procure, and orchestrate these distributed resources, thus limiting their ability to scale as a utility resource. In most states, utilities and regulators do not consider distributed resources in planning processes. Where distributed resources are considered, it is often only through voluntary offerings and limited pilot programs.
Leveraging distributed resource solutions requires state leaders to fix broken incentives and build new government capacity tools to facilitate uptake and utilization of these technologies.
Solutions
I. Incentivize adoption and use of distributed energy resources (Legislatures and Public Utility Commissions)
States can correct misaligned incentives by creating mechanisms to value the benefits of distributed energy resources and incentivize optimal utilization of distributed resources to reduce spending on new generation and grid upgrades.
Legislatures can establish Virtual Power Plant programs—run by utilities, public developers, or partnerships between public developers and utilities—to aggregate distributed energy resources to best serve the grid and compensate these resources accordingly.
Legislatures can incentivize adoption of appliances and customer energy systems, like smart chargers and thermostats, capable of supporting the electricity grid.
Legislatures and PUCs can require utilities to create mechanisms to value the benefits of distributed resources and adjust profit motives through performance-based ratemaking to align utility incentives with expanding distributed resources.
In Colorado, SB24-218 required Xcel Energy to create a new mechanism to compensate customers for distributed energy resources that can benefit the grid.
In New Jersey, Governor Sherill issued an Executive Order directing the PUC to establish a Virtual Power Plant program to aggregate distributed energy resources and use them to benefit the grid.
II. Require procurement of distributed resources (Governors, Legislatures, and Public Utility Commissions)
Utilities generally do not procure distributed resources, focusing instead on procurement and buildout of large-scale generation. Formal procurement of distributed resources can maximize use of the existing grid and get new generation onto the grid fast, which can avoid spending on the distribution grid and save customers money.
Legislatures can set statutory requirements for minimum procurement amounts.
PUCs can require utilities to conduct procurement of distributed clean energy.
Governors can direct PUCs to initiate solicitations for distributed clean energy and set timeframes and minimum procurement amounts that PUCs and utilities must meet.
In Minnesota, Xcel Energy has proposed a Distributed Capacity Procurement of 50-200 MW of distributed energy storage. Under the procurement, the utility would contract with a developer to build small-scale batteries and pay households, businesses, and non-profit organizations to host them.
In Illinois, the Clean and Reliable Grid Affordability Act required the procurement of 3 GW of storage and created a mechanism to compensate households and businesses for customer-owned storage. The state has a government agency—the Illinois Power Agency—that develops procurement plans and runs competitive procurement processes.
In Maine, the PUC issued a Request for Proposals for solar projects on PFAS-contaminated farm land.
In New Jersey, Governor Sherill directed the PUC to procure an additional 3,000 MW of community solar through the NJ Community Solar Energy Program.
III. Improve interconnection processes for distributed resources (Governors and Public Utility Commissions)
The interconnection process is a major hurdle for new clean energy projects. Utilities run the process to connect projects to the distribution grid, and PUCs regulate this process. Because utilities typically do not profit from distributed generation, they have generally deprioritized improvements to the interconnection process for distributed generation. PUCs have not had the mandate to push utilities on improving the interconnection process for distributed resources, which means capacity has not been channeled toward this goal. State leaders can force utilities to speed up the interconnection queue to get more clean energy on the grid.
Governors can direct PUCs to improve the interconnection process with specific goals (e.g., reduce the application approval time by a specified amount) and penalties for non-compliance.
PUCs can work with utilities to make improvements to the interconnection process to shorten timelines and provide more certainty to developers. PUCs can dedicate staff resources to this issue to ensure rapid improvements to the process.
Colorado Governor Polis in an August 2025 directive tasked state agencies to pursue flexible interconnection and voluntary curtailment for distributed energy and community solar projects; work to facilitate the pre-purchase of project equipment and/or affiliated electric transmission and distribution infrastructure; and to pursue updates to interconnection standards for customer-sited projects, including the use of meter collar adapters and other measures to minimize the cost and time. The Colorado PUC is now working to allow projects to use flexible interconnection agreements—alowing projects to connect to the grid in constrained places if they agree to use technologies that can operate flexibly and avoid straining the grid—which can speed up timelines and reduce interconnection costs.
In New Jersey, Governor Sherrill directed the PUC to take several steps to standardize and speed up interconnection of clean energy projects to the distribution grid.
IV. Improve data and analysis and increase transparency to optimize deployment (Governors, Legislatures, and Public Utility Commissions)
Expanding distributed energy resources in the right places is key to maximizing benefits to the grid and reducing costs for customers. States can help inform strategic adoption through data collection and analysis on the optimal places to deploy customer-owned resources and increase transparency of those data for the public.
Policymakers can analyze opportunities that will make the most impact through avoided costs of updating the grid or building bulk generation. Distributed energy projects are most useful when they minimize constraints on the distribution system and reduce peak demand. Information sharing can be facilitated through either Integration Capacity Analysis or regular Integrated Distribution Planning.
State leaders can also identify potential projects to provide tailored support by engaging developers and site hosts directly through Requests for Information. States can then use this information to direct support to projects. For example, data collection can enable aggregation and standardization of information about siting readiness, interconnection considerations, terms and conditions, and resilience needs which can then be converted into a pre-qualified inventory for procurement or financing.
Governors can direct agencies to engage with developers and other stakeholders to identify barriers to getting distributed projects built and identify solutions to support projects (e.g., connecting host sites with developers and financiers).
Governors and PUCs can improve distribution system planning to better anticipate infrastructure needs and ensure that distribution system planning is synced with grid operator interconnection processes and transmission planning.
PUCs can require utilities to conduct and publish analysis on hosting capacity and locational value of distributed clean energy resources and establish a market for distributed energy resources.
In Massachusetts in 2024, the PUC directed utilities to incorporate “non-wires alternatives”, including distributed energy resources, into system planning. Now, one of the state’s largest utilities has launched an innovative mechanism to quickly procure distributed energy resources that provide the greatest costs reductions and grid benefits.
The New York Build‑Ready program identifies potential host sites and shifts early development duties (i.e., negotiate the initial lease and start the interconnection process) from private developers to the state, which accelerates the move of renewable energy projects from the idea stage to construction.
In New Jersey, Governor Sherill directed the PUC to work with the utility to improve hosting capacity maps for distributed energy resources.
V. Create a Municipality or Sustainable Energy Utility in lieu of an Investor Owned Utility (Legislatures and Local Leaders)
Creating a municipal utility or sustainable energy utility (SEUs) can address bypass misaligned incentives and focus on the technologies and strategies that most benefit the public. These entities differ from traditional investor owned utilities because they are not-for-profit, owned by the communities they serve, and are run by local government. Benefits of this utility model include securing more affordable electric rates for consumers, achieving renewable and clean energy goals more quickly, increasing local control and governance over energy decisions and infrastructure, and contributing to local economic development.
Legislators and local leaders can spearhead the effort of municipalizing by developing a concept and authorizing or establishing a municipal utility. State and local leaders can explore different options, including developing a supplemental utility that procures generation but still uses the private utility’s poles and wires or fully acquiring the private utility and creating a public entity to run the full system.
In 2024, residents of Ann Arbor, Michigan voted to authorize Proposal A: Creation of a Sustainable Energy Utility. The Sustainable Energy Utility (SEU) will be an opt-in, supplemental, community-owned energy utility that provides 100% renewable energy from local solar and battery storage systems.
In 2005, residents of Winter Park, Florida voted to authorize the city’s use of bonds to buy the local distribution facilities from the incumbent utility.
The state of Nebraska receives all of its electricity from publicly owned sources.
Wield Creative Finance Tools to Drive Investment and Reduce Capital Costs
Rollbacks of federal financial support have threatened the viability of many clean energy projects. State and local leaders can help keep projects alive and build new ones with creative financing tools. In some cases, this means taking a more active role in coordinating across public and private sector actors, while in others that means building entirely new administrative capacities to perform more ambitious financial transactions or act as a public developer.
In addition, the grid is facing new challenges that require massive investments. For example, recovery from and preparation for wildfires is inflating energy bills in the west. Gulf states are facing similar costs from hurricanes. States need creative finance tools to ensure that these costs do not continue to raise bills for regular people and small businesses.
Beyond merely acting as a source of capital, governments of every shape and size actively participate at every stage in the project development and planning lifecycle to bring down the total cost of projects. These include lowering financing costs, securing stable or catalytic financing, and providing an avenue to complement other functions the state is undertaking. Local governments can engage in public development functions, including through creative finance tools and engagement with community choice aggregators, rural electric cooperatives, and energy service companies.
Solutions
I. Empower development entities with the legal authority and staffing to pursue high priority projects (Governors, Legislatures, Local Leaders)
State leaders can help ensure that infrastructure authorities, city and county development corporations, or energy departments of a given jurisdiction have the relevant borrowing authority, ownership and operation powers, and partnerships capabilities to support project development.
To be successful, state financing entities or public developers need clarity and certainty on how projects they support can participate in electricity market operations, including whether projects can participate in utility procurement processes or interact with grid operator interconnection processes. State financing also must be coordinated with other grid planning processes.
Given the overlapping interests state and local economic development agencies may hold, this process will demand adequate staffing resources and may require significant stakeholder engagement with private sector actors, government officials, and others.
Legislators can write or amend enabling authorities to explicitly provide state and local entities with the financing, bonding, ownership, and partnership authorities necessary to support, finance, own, and/or operate projects. These authorities should include co-financing and co-development options to blend public and private support. Legislators can also make sure that these authorities are flexible and broad so that state development can be competitive with private developers.
Legislators can allow use of public financing tools to support certain projects. In particular, legislators can expand the bonding authority available to state agencies for use on clean energy projects.
Legislators can establish state and/or utility procurement targets for clean energy, storage, and grid projects and provide direction and clarity for state financing entities to service these procurements.
Governors can use their authority over appointments and interagency coordination to align disparate entities around specific tangible objectives.
Governors can draw on recent public private partnerships in the offshore wind industry to structure offtake, procurement, and other commercial activities with utilities and developers across a range of clean energy projects. State entities can seed virtual power plants, solar, wind, energy storage and other clean power projects that mutually derisk projects for both public and private developers alike.
Governors and legislators can provide expedited permitting and siting processes for publicly sponsored projects.
City and county officials can form project-specific entities or special purpose authorities to make projects financeable.
In New Mexico, the Renewable Energy Transmission Authority (RETA) was established in 2007 and was granted statutory power to exercise eminent domain to acquire property or rights of way for eligible renewable energy projects. This authority has been critical in overcoming fragmented land acquisition barriers.
The Connecticut Green Bank’s Solar Marketplace Assistance Program (Solar MAP) serves as a public developer to finance and build solar projects for K-12 schools, allowing the state to own the assets and sell power back to districts at a discount. While the Green Bank has acted as a public public developer in some form since 2014, projects from Solar MAP are projected to deliver tens of millions of dollars in savings all without incurring any upfront costs for districts.
In Colorado, SB 21-072 in 2021 created the Colorado Electric Transmission Authority as a special-purpose development authority granted power to issue bonds and corridor acquisition tools.
II. Use pooled loan funds like state bond banks to lower borrowing costs and build project pipelines (Governors, Legislatures, and Local Leaders)
Pooled borrowing authorities offer transaction efficiency and credit strength for cities, counties or small utilities paying the fixed costs of a standalone bond issuance by aggregating relatively modest projects into standardized pools. This reduces the issuance and underwriting costs, and can often enhance credit resulting in lower borrowing costs.
Bond banks are valuable in practice because they are a repeatable financing infrastructure that can be improved and expanded over time. Governors offices, county executives, and mayors can direct agencies to build a steady pipeline of eligible projects (using Requests for Information or direct engagement) and then work with relevant financing authorities to standardize project intake, selection, and reporting and make the whole process more repeatable.
Once local governments experience lower borrowing costs and faster execution through a standardized conduit, the model becomes politically sticky and easier to scale, especially when paired with complementary tools like revolving funds or credit enhancement that can serve smaller borrowers and accelerate project turnover.
Legislators in states that lack a bond bank can establish one capable of pooling local loans, issuing bonds, and relending the proceeds. They can further work to standardize project solicitation, underwriting, and closing cycles to ensure the institution creates a regular cadence.
Legislators in states that have a bond bank can expand eligible project types (to include clean energy projects and resilience priorities like building retrofits, microgrids, etc.) and create standard project templates.
Governors can work with state agencies to centralize the origination of bonds for a public developer in their state’s bond bank or otherwise help public developers and other financing agencies exercise their bonding authority.
Governors can make regular use of bond banking authority a priority by directing agencies to run a standing intake process, and appoint or empower relevant state personnel to highlight pooled lending as an innovative solution.
City and county officials can create a rolling inventory of eligible projects, bundle them into multi-jurisdiction project aggregators and engage with existing bond banks on technical assistance for project scoping and diligence.
Vermont’s Bond Bank issues bonds backed by repayments of its loans to individual municipalities, school districts, etc. and maintains a dedicated Municipal Climate Recovery Fund. The bank has the ability to backstop non-payment by municipal or county entities that fail to pay based on state funds allocated to municipal or district borrowers in what is known as an “intercept mechanism.”
Virginia Resource Authority’s Resilient Virginia Revolving Fund was established in 2022. Jointly administered with the state’s Department of Conservation and Recreation, the pooled borrowing platform provides financial assistance for flood-mitigation projects across the state.
III. Require energy utilities to supplement portions of their debt or equity with public bonds (Governors, Legislatures, and Local Leaders)
A unique characteristic of public development is that strategic capital deployment has the potential to derisk private investment. Mandating that utilities replace a portion of their high-cost equity with state backed public debt or revenue bonds optimizes the project’s capital stack, thereby reducing the average cost of capital and reducing the total financing costs for capital-intensive grid infrastructure. Investor-owned utilities typically finance large infrastructure projects through a mix of debt and equity with regulators guaranteeing a return on equity (ROE) to attract private investors. Because this ROE is significantly higher than the interest rates on public debt, requiring public bonds to supplement the capital stack can dramatically reduce the long-term costs that are ultimately passed on to ratepayers.
This mechanism leverages the state’s superior credit rating and tax-exempt status to fund the most expensive portions of development while leaving the utility to focus on its core competencies of construction and grid operation. Establishing a public financing facility in this way allows the public sector to act as a sponsor investor for projects of high public interest, such as interregional transmission lines. By providing lower cost debt, states can ensure that critical energy targets are met without placing an undue financial burden on households. This approach creates a more stable investment environment and allocates risks more effectively across public and private stakeholders.
Legislators can mandate investor-owned utilities make use of state-backed revenue bonds or other forms of public debt to finance high-priority capital investments such as grid resilience or interregional transmission.
Legislators can authorize state infrastructure banks or other financing authorities to act as sponsor investors and displace high cost equity of a project’s capital.
Governors can establish dedicated clean energy project finance working groups to examine the full scope of infrastructure financing tools needed to derisk capital investment in transmission, generation, distribution and other electricity assets.
Regulators and state energy offices can lower the costs passed along to ratepayers by integrating public financing facilities directly into RFP processes, allowing bidders to access lower-cost capital.
City and county officials can pass local resolutions advocating for a specific local utility project to be financed via public bond rather than traditional utility equity to ensure the lowest possible rate impact for their residents. A similar strategy can be pursued via written submission or intervention within PUC docket proceedings.
City and county officials can collaborate with state energy offices to identify projects that are ideal candidates for public debt supplements.
California’s 2025 law SB 254 establishes a state public financing facility (the Transmission Infrastructure Accelerator) to replace high-cost utility equity with lower-cost public debt for new transmission projects, directly reducing the ratepayer impact of CAISO’s multi-decade development plans. The law requires utilities to finance billions of dollars of grid hardening investments using bonds instead of utility equity financing, reducing costs for customers and preventing the utility from excessively profiting off of this set of expenditures.
Maine’s Clean Energy Financing Study recommends operationalizing state revenue bond authority and establishing a working group on large clean energy project finance to optimize the capital stack for clean energy and transmission projects.
IV. Develop greater public understanding about the development levers available to public or quasi-public entities (Governors, Legislatures, and Local Leaders)
Some financial functions like loan issuance, co-financing, and non-dilutive debt financing may be well known to state energy offices, green banks, and certain infrastructure authorities. But in general, public financing is hampered by a lack of clarity, information, and standardization of different agencies’ authorities.
States can maximize the impact of public resources by establishing clear financing authorities and responsibilities, providing state authorities with broad powers to flexibly support projects, ensure that public finance is prioritizing the right investments, and providing clear direction on how publicly sponsored projects support utility procurement or grid operator processes. In addition, standardizing state and local financing entities drives down costs by making processes more repeatable and can pave the way for more effective federal support in the future. By surfacing all the capabilities public entities currently have and may wish to develop in the future, policymakers and advocates can align on objectives to strengthen the public developer toolkit and bring clean energy projects closer to fruition.
Governors can inventory borrowing, contracting, and financing authorities and provide clear guidance on roles and responsibilities between agencies.
Governors and legislatures can require reporting on key performance metrics like deal volume, borrower participation, and time-to-close to help encourage institutionalization.
Governors and legislators can publish analysis and information on areas to focus energy project development and create special zones for the installation, procurement, manufacturing, or operation of energy projects of various kinds. These industrial zones could provide access to a variety of benefits: expedited permitting, siting, interconnection, specific public finance facilities, funds for resiliency + operation, and various other coordination benefits from other interested state agencies.
Legislatures can provide agencies with clear financing authorities, direction on what types of projects to support, and a broad set of tools to flexibly support projects.
City and county officials can examine if there are relevant state laws that require additional ordinance/resolution to use. Some tools to activate and then specify rules to create repeatable administrative playbooks.
Houston, Texas had to pass an authorizing city ordinance to activate a state program known as Property Assessed Clean Energy (PACE). The program allows commercial and multifamily property owners to finance energy efficiency, renewable energy, and water conservation improvements and has invested over $540 million dollars statewide since its inception in 2016.
Montgomery County, Maryland created a green bank in 2016. In 2022, the county passed a statute to direct 10% of the county’s fuel tax revenue to the Montgomery County Green Bank each year. The green bank completed a new bus depot for EV buses in 2022 co-located with a 6.5 MW microgrid that can run independent of the local utility.
Colorado has an EPC program that lends against a project’s anticipated cost savings to finance building retrofits.
“Going Back to Cali” for AI Governance Lessons as States Take the Lead on AI Implementation
Imagine you are a state-level technology leader. Recent advancements in artificial intelligence promise to make approving small business licenses faster, or improve K-12 student learning, or even standardize compliance between agencies. All of which promise to improve the experience of your state’s constituents. Eager to deploy this new technology responsibly, you look to peers in other states for guidance. Their answers vary wildly, and in the absence of federal guidance, it quickly becomes clear that there is no standardized playbook. You must chart the path forward on your own, with far more limited resources.
This scenario is becoming increasingly common as AI systems are moving rapidly into consumer-facing services. Without federal action on AI, state government leaders are increasingly shouldering the responsibility for both protecting consumers from potential algorithmic harms and also supporting responsible innovation to improve service delivery to their constituents. States have structural advantages that position them to experiment with regulatory approaches: shorter legislative cycles that allow for quicker course corrections, authority to pilot programs, and the use of sunset provisions that make it easier to revise or retire early-stage governance models. This often places states as the most agile regulators who can swiftly set up guardrails for rapidly evolving AI technologies that impact their residents.
But this regulatory agility must be matched with the necessary government capacity in order to be a success. The current lack of federal action is forcing states not only to pass new AI laws, but also to take on huge implementation challenges, without the AI expertise typically found in federal agencies or major private employers. Building this capacity within state governments will demand resources and technical expertise that most states are only just starting to chart . Without deliberate investment in transparency and talent, even the most well-crafted legislation might not achieve their intended goals. As State legislative cycles start back up for the 2026 year, state policymakers should move forward with proposals that increase transparency, accountability, and bring new technical experts directly into government to meet the scale of need in the current moment.
Increased Transparency to Build Public Trust
One of the most immediate ways that state legislatures can move forward with transparency-improving legislation is with the passage and successful implementation of use-case inventories. A use-case inventory is a public-facing publication of algorithmic tools and their specific uses. They disclose when and where state governments are utilizing algorithmic tools in consumer-facing transactions such as applications for social programs and public assistance benefits. They are typically conducted by governments as a mechanism for transparency and to facilitate third-party auditing of outcomes.
The benefits of public-facing AI use-case inventories are far reaching: they increase government transparency into automated decision-making outcomes, can provide valuable insights to private-sector product vendors, facilitate third-party auditing and bias-testing, and can even increase interagency sharing of best practices when AI tools are effectively used. They are particularly important in high-risk decisions such as those related to government benefits and services. Alternatively, a lack of transparency in expensive acquisitions from private and third party vendors can mean that an agency or entity is unaware of what tools they have acquired and whether or not they are safe to deploy in consumer-facing settings without bias or other inaccuracies.
When increasing numbers of Americans are growing skeptical of the practical uses of AI tools, it is doubly important to design public systems that encourage transparency when algorithmic tools are deployed in the public and private sectors alike.
Despite a lack of federal legislation regulating responsible AI usage, one area where the federal government has led is in the production of regular AI use-case inventories since 2021. First requested via Executive Order 13960 in 2020 during the first Trump administration, and implemented in the Summer of 2021, the federal government provides a relatively transparent accounting of where AI is adopted within the federal enterprise. This policy has had bipartisan appeal, and the Biden administration continued the production of regularly updated inventories for the public. The Trump administration with its recently updated inventory now has the opportunity to use this tool to deliver increased public trust in AI, a clear administration priority.
Case Study: Implementation Challenges in California
While the federal experience demonstrates that AI use-case inventories can work, it also reveals an important limitation: transparency mechanisms rely on technical talent and focused implementation to be successful. California offers a cautionary example. In 2023, the state legislature passed Assembly Bill 302 requesting the State Department of Technology to “conduct a comprehensive inventory of all high-risk automated decision systems [ADS] being used by state agencies and submit a report to the Legislature by January 1, 2025, and annually thereafter.” Importantly, the bill covered systems that are “used to assist or replace human discretionary decisionmaking.” The bill was envisioned as a critical first step in gaining insight into the ways AI was being deployed in consumer-facing interactions by state government agencies. It was also in reaction to public reporting of biased technology being used on those applying for public services and benefits.
However, the initial implementation deadline for the bill passed in early 2025 and the only report provided to the public was a single document stating that there are “no high-risk ADS [tools] being used by State agencies”—a fact that is easily disputed by a simple Google search. For example, the state healthcare exchange uses automated document processing tools to gauge eligibility for affordable health insurance policies, the state unemployment insurance program uses an algorithmic tool developed by a private company to rate applicants on the likelihood of their application being fraudulent, and the state Department of Finance even plans to use generative AI tools as part of fiscal analysis and state budgeting work. These are significant decisions that can have real repercussions for California residents. Rather than creating a transparent use-case inventory that can tell Californians where AI is being used in consumer-facing interactions, we instead have a letter which incorrectly states —based on examples above—that there are no algorithmic tools being used. The table below has additional examples of publicly disclosed automated decision-making system use cases in California state government.
Results like this underscore the urgent need to embed technical talent within state governments to ensure that laws are implemented as designed. When implementing its use case inventories, the federal government provided guidance to reporting agencies and publicly released a final inventory for a majority of agencies. Even with substantial support during the federal government’s collection process, there were still notable implementation challenges faced when creating a federal use-case inventory. Most notably, many agencies initially failed to disclose all use-cases, and a promised template for agencies to use has yet to come to fruition. The State of California, by contrast, instead relied on an ad hoc process, polling state agency officials through two successive emails to conduct its inventory evaluation.
Scaling Government Talent to Bridge the Technical Capacity Gap
California’s experience implementing a use-case inventory is, unfortunately, not unique. Across the country, well-intentioned legislation is often passed into law only to falter during implementation. Once enacted, agency staff are tasked with operationalizing complex policies, often without the necessary technical expertise, staffing capacity, or financial resources to succeed. Without deliberate investment in these areas, the responsibility of properly regulating emerging technologies and protecting consumers from harm is shifted to government employees that are poorly equipped to handle the growing scope and technical complexity of their workloads. That is why, in addition to transparency, states need to find ways to quickly bring in technical talent and expertise in digital technologies to drive forward effective implementation of the coming onslaught of bills.
In the midst of massive layoffs within the federal government and private sector, individual states now have access to historic levels of human capital and can bring forward some of the innovations developed within the federal government in recent years. Methods like skills-based hiring to rapidly bring in technical talent and scale new teams within government have also been developed and thoroughly tested in recent years through entities like the United States Digital Service (USDS) and the Consumer Financial Protection Bureau’s in-house technologists. These initiatives brought skilled workers into government at less than half the recruiting cost of private sector hiring and saved hundreds of millions of dollars through reimbursable agreements with agencies in lieu of costly private sector consultancy contracts.
During periods of financial uncertainty it can be deeply challenging for state leaders to make the investments necessary to hire additional staff and build robust government teams. One other method to bridge the gap between policymakers and those who implement it is through the development of modernized policy fellowships that utilize endowments or other private funds to bring cutting-edge researchers and experts directly into government. California has most recently unveiled a revamped science and technology fellowship that will place additional AI experts within state agencies or the legislature to propel forward-thinking and informed policymaking.
Conclusion
With no federal framework in place, state governments will be the primary drivers of accountability and transparency needed to ensure AI serves the public rather than erodes democratic norms. This presents us with a crucial window for state policymakers to establish both processes that further transparency and robust talent pipelines that can manage responsible deployment in order to restore public trust and prevent harms before AI systems become further entrenched in critical public services. States that build transparent AI use-case inventories and invest in technical expertise will be best positioned to translate lofty regulatory principles into real protections for their citizens—while also fostering a fairer, more trustworthy environment for innovation to thrive.
Tax Filing as Easy as Mobile Banking: Creating Product-Driven Government
Americans trade stocks instantly, but spend 13 hours on tax forms. They send cash by text, but wait weeks for IRS responses. The nation’s revenue collector ranks dead last in citizen satisfaction. The problem isn’t just paperwork — it’s how the government builds.
The fix: build for users, not compliance. Ship daily, not yearly. Cultivate talent, don’t rent it. Apple doesn’t outsource the creation of its products; the IRS shouldn’t outsource taxpayer experience. Why?
The goal: make taxes as easy as mobile banking.
The IRS, backed by a Congress and an administration that truly wants real improvements and efficiencies, must invest in building its tax products in house. Start with establishing a Chief Digital Officer (CDO) at the IRS directly reporting to the Commissioner. This CDO must have the authority to oversee digital and business transformation across the organization. This requires hiring hundreds of senior engineers, product managers, and designers—all deeply embedded with IRS accountants, lawyers, and customer service agents to rebuild taxpayer services. This represents true government efficiency: redirecting contractor spending to fund internal teams that build what American taxpayers should own rather than rent.
This is about more than broken technology. This is a roadmap for building modern, user-centric government organizations. The IRS touches every American, making it the perfect lab for proving the government can work.
Transform the IRS first, then apply these principles across every agency where citizens expect digital experiences that actually work.
Challenge & Opportunity
It’s April 15th. For the first time, you’re not fretting.
You finished filing your taxes on a free app. It took 15 minutes. Your income? Already there. Your credits? Pre-calculated and ready to claim. Your refund? Hitting your bank account tomorrow.
For millions around the world, swift, painless tax filing isn’t a dream. It’s the norm. It should be for Americans, too.
But in the U.S., the IRS experience is still slow, opaque, process-heavy, and frustrating. Tax filing is one of the few universal interactions Americans have with their government—and it’s not one that earns much trust.
It doesn’t have to be this way. We were on the path to delivering that with IRS Direct File and needed to recommit. To deliver wildly easier taxes for Americans, we can, and must, build an IRS that meets high modern expectations: fast, transparent, digital-first, and relentlessly taxpayer-focused.
The Diagnosis
Each year, the IRS collects more than 96% of the revenue that funds the federal government—$5.1 trillion supporting everything from Social Security, defense, infrastructure, veterans’ services, and investing in America’s future.
The quote from Justice Oliver Wendell Holmes, carved into the limestone face of the IRS headquarters in D.C., captures the spirit well:
“Taxes are what we pay for civilized society.”
It is not only essential to the functioning of government—it is also a major way most Americans interact with it. And that experience? Frustrating, costly, and confusing. According to a recent Pew survey, Americans rate the IRS less favorably than any other federal agency. The average taxpayer spends 13 hours and $270 out of pocket just to file their return.
The core problem: The IRS needs to be user-focused.
Despite the stakes, the IRS operates far behind what Americans expect. We live in a world where people can tap to pay, split bills by text, or trade stocks in slick apps. But that world does not include the IRS.
A staggering 63% of the 10.4 billion hours Americans spend dealing with the federal government are consumed by IRS paperwork. But much of the source of that pain isn’t the IRS, but Congress with the crushing complexity of decades long tax code changes, sedimented on top of each other. This year was no different. The “One Big Beautiful Bill” runs 331 pages, with large swaths devoted to new, intricate tax changes.
Dealing with the IRS still often involves paper forms, long phone waits, chasing down documents, and confusing processes.
If you’ve dealt with the IRS for anything beyond filing, it feels impossible to get a task finished. Will someone pick up the phone? Can I get an answer to my questions and resolve my situation? Would I expect the same answer if I talked to someone else? Last year the IRS answered just 49% of the 100 million calls it received, including automated answering.
This underperformance is beyond outdated technology—it’s structural and institutional. The IRS’s core systems are brittle and fragmented. Ancient procurement rules and funding constraints have made sustained modernization nearly impossible. Siloed organizations sit within siloes. In place of long-term investment, the agency leans heavily on short-term contractor fixes, band-aids applied to legacy wounds.
This complexity has stymied scaled change.
The root cause: The IRS has never treated world-class technology and product development as mission-critical capabilities core to its identity, to be hired, owned, and continually improved by internal teams focused on user outcomes.
A modern service agency builds end-to-end experiences for users—from pre-populating data through to filing and refunds. Empowered teams building these features have a holistic viewpoint and control over their service to ensure taxpayers are able to repeatedly and reliably complete their task.
Today’s reality is different: federal agencies like the IRS treat technical and product expertise as afterthoughts—all nice-to-haves that serve bureaucratic processes rather than core capabilities essential to their mission. Strategy and execution get outsourced by default. This creates a growing divide between “business” and “IT” teams, each lacking a deep understanding of the other’s work, despite both being critical to delivering services that actually function for taxpayers.
This outsourcing has hollowed out the agency’s internal technical capacity. Rather than building technical competency in-house, and paying that talent a salary approaching private companies, the IRS grows more dependent on vendors. It no longer knows what it needs technically, what questions to ask or which paths to pursue. Instead they must trust the vendors–companies financially incentivised towards ballooning scopes, lock-in, and complexity.
The result: a siloed experience that mirrors a siloed organization, one that is risk-averse, paper-heavy IRS, too slow to meet modern expectations.
The agency approaches service delivery as a compliance and bureaucratic process to digitize, rather than a product to design. “Never ship your org-chart” is a common refrain you’ll hear at tech companies, to explain how products tend to take on the communication style of their builders. Yet IRS product faultlines visibly follow its org structure and thus fail to deliver a holistic experience.
There were bright spots. Direct File showed what’s possible when empowered teams build for users. A dead simple idea: let Americans file taxes directly on the IRS site was a reality. It worked. It was well regarded. In surveys, users beamed about Direct File: 9 out of 10 gave it an “excellent” or “above average” rating, 74% said they preferred it over what they used before, and 86% said it increased their trust in the IRS.
The government actually delivered for its citizens, and they felt it.
But it didn’t last. The project was abruptly dismantled due to political ideology, not taxpayer experience or feedback.
Many of the people with the technical skills and vision to modernize the IRS have left, often without a choice. The agency will likely slide further backward—into deeper dependence on systems built by the lowest bidder or those currying political favor, with poorer service and diminished public trust in return.
We’ve seen this up close.
Both of us worked at The White House’s technology arm; the U.S. Digital Service. One of us helped lead Direct File into existence and built the Consumer Financial Protection Bureau’s digital team. The other previously led Google’s first large language model products and prototyped AI tools at the IRS to streamline internal knowledge work.
In our work at the IRS, we witnessed how far the agency must go. Inside the IRS Commissioner’s office, with leaders across the agency, we built a collaborative digital strategic plan. This memo details those proposals since left by the wayside after seven different IRS commissioners rotated in the seat, just this year.
The IRS needs more than modernization. It will need a systemic rebuild from:
- compliance, to user-centered design and product thinking
- vendor dependence to empowered internal product teams
- once-a-year panic to real-time, year-round services
- fragile mainframes to composable platforms and APIs
- waterfall contracting to iterative, continuous delivery
We’re sharing these recommendations for a future Day One—when there’s a refocus on rebuilding the government. When that day comes, the blueprint will be here: drawn from inside experience, built on hard lessons, and focused on what it will take to deliver a digital IRS that truly works for the American people.
What we need is the mandate to build a tax system that makes Americans think: “That was it? That was easy.”
Plan of Action
The IRS must rebuild taxpayer services around citizen needs rather than compliance and bureaucratic processes. This requires in-housing the talent to strategically build it. We propose establishing a Chief Digital Officer directly reporting to the Commissioner, with the authority to oversee digital and business transformation across the organization, hire hundreds of senior engineers, product managers, and designers. The goal, a team empowered to deliver a tax-filling product experience that meets modern expectations.
The Products
Build for Users, Not Internal Compliance
We’ve become accustomed to a user-focused fit-and-finish in the app era. Let’s deliver that same level for taxpayers.
It all starts around building a digital platform that empowers taxpayers, businesses, and preparers with the information, tools and services to handle taxes accurately and confidently. A fully-featured online account becomes the one-stop, self-service hub for all tasks. Taxpayers access their complete tax profile, updated in real-time, with current data across income sources, financial institutions, and full tax history. The system proactively recommends tax breaks, credits, and withholding adjustments they’re eligible for.
Critically, this can’t be built in a vacuum. It requires rapid iteration with users as part of a constant feedback loop. This digital platform runs on robust APIs that power internal tools, IRS public sites, and third-party software. Building this way ensures alignment across IRS teams, eliminates duplicate efforts, and lifts the entire tax software ecosystem.
This is what we need to build for Americans:
Online tax filing: From annual panic to year-round readiness
Reboot Direct File. Stop forcing everything into tax season. Let taxpayers update information year-round—add a child, change addresses, adjust withholdings, upload documents. When April arrives, their return is already 90% complete.
This is a natural evolution of Direct File and the existing non-editable online account dashboard into a living, breathing system taxpayers optimize throughout the year. And not just for individuals—this should be extended to businesses—reducing this burden for as many filer types as possible.
Pre-populated returns: Stop making people provide what the IRS already knows
The IRS already has W-2s, 1099s, and financial data. Use it. Pre-populate returns to cut filing time from hours to minutes. Deliver secure APIs so any tax software can access IRS data (with taxpayer permission), and use machine learning to flag issues including fraud before submission. This increases accuracy, reduces errors, and spurs competition by making it easy to switch between tax-filing programs.
Income verification as a service: Turn tax data into financial opportunity
The IRS sits on verified income data that could help Americans access government services, credit, mortgages, and benefits like student aid. Instead of weeks-long transcript requests, offer instant verification through secure APIs. This creates a government-backed source alongside credit bureaus, increases financial access, and reduces paperwork across all government services.
Tax calculator as a platform: One source of truth
Every tax software company recreates the same calculations, each slightly different. Across the organization, the IRS itself uses multiple third-party tax calculators in audits. This should be a core, integral service the IRS offers—build a definitive tax calculator as an API, the single source of truth that internal audits and checks use, and external software can access or run on their own. Make it transparent, auditable, and open source. Put up cash “bounties” to encourage the public to find bugs and errors and invite taxation-critics to review the code. Use generative AI to aid IRS accountants, lawyers and engineers translate tax law changes into code–speeding the roll out of Congressional tax changes.
When everyone calculates taxes the same way the IRS does, errors vanish. When everyone can see how the IRS does it, trust grows.
Modern MeF: From submission pipe to intelligent platform
Today’s Modernized e-File (MeF) is barely modern—it’s a dumb pipe that accepts tax returns and hopes for the best. Transform it into intelligent infrastructure that validates in real-time, catches errors immediately (not weeks later in confusing notices), and stops fraud before refunds are deposited. Build it like a real API, not XML dumps. Enable multi-part submissions so taxpayers can fix mistakes without starting over. This isn’t just a technical upgrade—it’s the foundation that makes every other improvement possible.
The Process
Ship Daily, Not Yearly
Taxpayer-first product development
The IRS is the single largest interaction point between Americans and their government. Every improvement saves millions of hours and builds trust. This requires abandoning bureaucratic processes for product thinking.
Build with taxpayers from day one through constant user testing and feedback loops. Organize around taxpayer journeys—”I need to update my withholdings” or “I’m checking my refund”—not org charts.
Measure what matters: time-to-file, satisfaction scores, error rates, not only compliance metrics. Internal Objectives and Key Results planning makes priorities clear and syncs the organization towards focused goals. Publish Service Level Objectives on external products to ensure we target creating systems that others can confidently rely and build on.
Give full-stack product teams the authority to make integrated technical, design, policy and legal decisions together. Staff these teams with internal technologists embedded alongside accountants and lawyers in functional organizations, building IRS competency while reducing contractor dependence. Today’s IRS is highly siloed across functions with authority so fragmented it’s unclear who “owns” what. Yet go to any top tech organization and you’ll see what we’re pushing for: aligned and cross-functional teams whose job is delivering with clear ownership. Inherently we’re pushing for more than a new team, we’re factoring out unclear ownership in general away from IT and Business Divisions.
When teams own outcomes, we can better ensure taxpayer experience transforms from painful to painless.
API-first architecture
The IRS is fundamentally a data organization, yet information flows through siloed systems that can’t talk to each other. Amazon solved this with a simple mandate: all teams must expose their data and communicate through APIs. (This mindset set in motion the seeds of Amazon Web Services, the company’s most profitable division).
The IRS needs the same revolution.
Every team exposes data and functionality through standardized REST APIs—no direct database access, no per-department clones of the data, no exceptions. Design every API to be externalizable (with strong access controls) from day one, unlocking government APIs to become platforms for innovation. When systems communicate through versioned APIs instead of tangled dependencies, teams can ship improvements daily without compromising everything else. This isn’t just technical architecture—it’s how modern organizations move fast without breaking things.
The People
Cultivate it, Don’t Outsource It; Build a Delivery Culture
A digital IRS that delivers for Americans cannot be built by the lowest bidder. Its core capability isn’t digitized forms–it’s people who can understand taxpayers’ needs, imagine solutions, design thoughtfully, ship them fast, listen to users, and keep improving based on feedback.
Silicon Valley understands this instinctively on two fronts. The fight for great engineers is the fight to build teams that can deliver great products. And two, no leading tech company outsources its own R&D. Delivering well-functioning and beloved products requires tight ownership of the product iteration loop.
Businesses long learned to never outsource a core competency. OpenAI would never outsource the training of its models, Apple its industrial design, Google its search algorithm, or Facebook its social graph. The same should be true for the IRS.
Yet, despite accepting 93% of its tax returns digitally, it still does not consider itself to be a digital-first agency. Building great teams is inseparable from building great taxpayer experiences. For decades, the agency has outsourced its technical mission and vision.
What we witnessed at the IRS was often vendor theater. Consultants transformed routine meetings into sales presentations that should have been dedicated to improving the products. Solutions specialists added layers of proprietary middleware, despite readily available enterprise-grade open source solutions running on commodity servers could easily meet the objectives. All of this unfolded within an organizational culture where securing contracts took precedence over delivering meaningful outcomes. Contracts that, of course, cost multiples more than the price of a competent internal team.
Commodities like cloud infrastructure or off-the-shelf software that serve broad, generic needs should absolutely be acquired externally. But the IRS’s critical, taxpayer-facing products—the systems at the heart of filing, payments, and taxpayer accounts—must be built and owned internally. There is only one agency that collects taxes for the United States of America.
When everything is handed to vendors, the IRS sends more than money out the door; it loses institutional memory, technical craft, quality systems, and the ability to move quickly. A modern IRS cannot be built on rented skills.
Talent: Build a Permanent Product Core
This transformation starts with the people: build and keep an in-house corps of top-tier technologists—engineers, product managers, designers, user experience researchers—working in small, empowered, cross-functional teams hand in hand with fellow IRS accountants, auditors, customer service representatives and lawyers. Not a handful of digital specialists scattered in a bureaucracy as it was, but several hundred people whose full-time job is delivering and evolving the IRS’s core taxpayer experiences and services.
- Create a dedicated Digital Profession inside the IRS, led by a Chief Digital Officer with the authority to hire, fire, and shape teams and technology stacks.
- Break the straitjacket of outdated civil service rules by creating specialist pay bands to compete for top talent like the CFPB has done.
- Empower cross-functional teams to ship without endless escalation. Start small, test early, iterate quickly, and make product decisions by those close to the work.
Funding: Invest in Teams, Not Projects
Current funding locks the IRS into one-off projects that end when the money runs out, leaving no path for iteration. A product-centered IRS needs enduring funding for enduring teams. Long-lived services, not short-lived milestones. This should be no surprise for a tax organization. There are two certainties in life; death and taxes. We should properly set ourselves up to manage the latter.
- Fund continuous development rather than one-and-done “delivery.”
- Tie funding to taxpayer outcomes like faster filing, fewer errors, higher satisfaction, instead of compliance checklists.
- Secure multi-year budgets for core product teams so they can improve services year-round, not scramble for appropriations each cycle.
This shift will reduce long-term capital costs and ensure that every dollar invested keeps improving the taxpayer experience.
Quality & Standards: Build Once, Build Right
Owning our products means owning their quality. That requires clear, enforceable service standards, like performance, usability, scalability, and accessibility, that every IRS product must meet.
- Establish service performance benchmarks and hold teams accountable to them. These should be highly taxpayer centric; time to file, support response time, ease of use.
- Create communities of practice inside the organization to share patterns, tooling, and lessons learned across the agency.
- Apply spend controls that tie contract renewals to measurable outcomes and prevent redundant vendor builds.
Culture Eats Strategy: Time to Invest in a Delivery Culture
“Culture eats strategy for breakfast,” as Peter Drucker famously said. Yet government agencies too often treat culture-building as off-limits or irrelevant. This is backwards. Creating a shared, collaborative culture centered on delivery isn’t just important; it’s the foundation that makes everything else possible. The hardest and most critical step is investing in people. Give employees space to collaborate meaningfully, contribute their expertise, and take ownership of outcomes. Leadership must empower teams with real authority, establish clear performance standards, and hold everyone accountable for meeting—or exceeding—those benchmarks. Without this cultural shift, even the best strategy becomes just another plan gathering dust.
When every product meets the same high standard, trust in the IRS will grow—because taxpayers will feel it in every interaction.
A template for all agencies
The IRS touches more Americans than any other federal agency–making it the perfect proof point that the government can deliver digital products that work seamlessly. The principles–build for users, not compliance, shipping daily, not yearly, and keeping the talent in house is not unique to the IRS.
We believe these goals and strategies apply to nearly every agency and level of government. Imagine Social Security retirement planning tools that lead to easy withholding adjustments, a Medicare/Medicaid that is easy to enroll in, or a FEMA with easy to file disaster relief disbursement.
Transform the IRS this towards this path, and then use these lessons to reset and lift up expectations between Americans and their government. One so easy citizens say: “That was it? That was easy.”
Federal Climate Policy Is Being Gutted. What Does That Say About How Well It Was Working?
On the left is the Bankside Power Station in 1953. That vast relic of the fossil era once towered over London, oily smoke pouring from its towering chimney. These days, Bankside looks like the right:
The old power plant’s vast turbine hall is now at the heart of the airy Tate Modern Art Museum; sculptures rest where the boilers once churned.
Bankside’s evolution into the Tate illustrates that transformations, both literal and figurative, are possible for our energy and economic systems. Some degree of demolition – if paired with a plan – can open up space for something innovative and durable.
Today, the entire energy sector is undergoing a massive transformation. After years of flat energy demand served by aging fossil power plants, solar energy and battery storage are increasingly dominating energy additions to meet rising load. Global investment in clean energy will be twice as big as investment in fossil fuels this year. But in the United States, the energy sector is also undergoing substantial regulatory demolition, courtesy of a wave of executive and Congressional attacks and sweeping potential cuts to tax credits for clean energy.
What’s missing is a compelling plan for the future. The plan certainly shouldn’t be to cede leadership on modern energy technologies to China, as President Trump seems to be suggesting; that approach is geopolitically unwise and, frankly, economically idiotic. But neither should the plan be to just re-erect the systems that are being torn down. Those systems, in many ways, weren’t working. We need a new plan – a new paradigm – for the next era of climate and clean energy progress in the United States.
Asking Good Questions About Climate Policy Designs
How do we turn demolition into a superior remodel? First, we have to agree on what we’re trying to build. Let’s start with what should be three unobjectionable principles.
Principle 1. Climate change is a problem worth fixing – fast. Climate change is staggeringly expensive. Climate change also wrecks entire cities, takes lives, and generally makes people more miserable. Climate change, in short, is a problem we must fix. Ignoring and defunding climate science is not going to make it go away.
Principle 2. What we do should work. Tackling the climate crisis isn’t just about cleaning up smokestacks or sewer outflows; it’s about shifting a national economic system and physical infrastructure that has been rooted in fossil fuels for more than a century. Our responses must reflect this reality. To the extent possible, we will be much better served by developing fit-for-purpose solutions rather than just press-ganging old institutions, statutes, and technologies into climate service.
Principle 3. What we do should last. The half-life of many climate strategies in the United States has been woefully short. The Clean Power Plan, much touted by President Obama, never went into force. The Trump administration has now turned off California’s clean vehicle programs multiple times. Much of this hyperpolarized back-and-forth is driven by a combination of far-right opposition to regulation as a matter of principle and the fossil fuel industry pushing mass de-regulation for self-enrichment – a frustrating reality, but one that can only be altered by new strategies that are potent enough to displace vocal political constituencies and entrenched legacy corporate interests.
With these principles in mind, the path forward becomes clearer. We can agree that ambitious climate policy is necessary; protecting Americans from climate threats and destabilization (Principle 1) directly aligns with the founding Constitutional objectives of ensuring domestic tranquility, providing for the common defense, and promoting general welfare. We can also agree that the problem in front of us is figuring out which tools we need, not how to retain the tools we had, regardless of their demonstrated efficacy (Principle 2). And we can recognize that achieving progress in the long run requires solutions that are both politically and economically durable (Principle 3).
Below, we consider how these principles might guide our responses to this summer’s crop of regulatory reversals and proposed shifts in federal investment.
Honing Regulatory Approaches
The Trump Administration recently announced that it plans to dismantle the “endangerment finding” – the legal predicate for the Environmental Protection Agency (EPA) to regulate greenhouse gas emissions from power plants and transportation; meanwhile, the Senate revoked permission for California to enforce key car and truck emission standards. It has also proposed to roll back key power plant toxic and greenhouse gas standards. We agree with those who think that these actions are scientifically baseless and likely illegal, and therefore support efforts to counter them. But we should also reckon honestly with how the regulatory tools we are defending have played out so far.
Federal and state pollution rules have indisputably been a giant public-health victory. EPA standards under the Clean Air Act led directly to dramatic reductions in harmful particulate matter and other air pollutants, saving hundreds of thousands of lives and avoiding millions of cases of asthma and other respiratory diseases. Federal regulations similarly caused mercury pollution from coal-fired power plants to drop by 90% in just over a decade. Pending federal rollbacks of mercury rules thus warrant vocal opposition. In the transportation sector, tailpipe emissions standards for traditional combustion vehicles have been impressively effective. These and other rules have indeed delivered some climate benefits by forcing the fossil fuel industry to face pollution clean-up costs and driving development of clean technologies.
But if our primary goal is motivating a broad energy transition (i.e., what needs to happen per Principle 1), then we should think beyond pollution rules as our only tools – and allocate resources beyond immediate defensive fights. Why? The first reason is that, as we have previously written, these rules are poorly equipped to drive that transition. Federal and state environmental agencies can do many things well, but running national economic strategy and industrial policy primarily through pollution statutes is hardly the obvious choice (Principle 2).
Consider the power sector. The most promising path to decarbonize the grid is actually speeding up replacement of old coal and gas plants with renewables by easing unduly complex interconnection processes that would speed adding clean energy to address rising demand, and allow the old plants to retire and be replaced – not bolting pollution-control devices on ancient smokestacks. That’s an economic and grid policy puzzle, not a pollution regulatory challenge, at heart. Most new power plants are renewable- or battery-powered anyway. Some new gas plants might be built in response to growing demand, but the gas turbine pipeline is backed up, limiting the scope of new fossil power, and cheaper clean power is coming online much more quickly wherever grid regulators have their act together. Certainly regulations could help accelerate this shift, but the evidence suggests that they may be complementary, not primary, tools.
The upshot is that economics and subnational policies, not federal greenhouse gas regulation, have largely driven power plant decarbonization to date and therefore warrant our central focus. Indeed, states that have made adding renewable infrastructure easy, like Texas, have often been ahead of states, like California, where regulatory targets are stronger but infrastructure is harder to build. (It’s also worth noting that these same economics mean that the Trump Administration’s efforts to revert back to a wholly fossil fuel economy by repealing federal pollution standards will largely fail – again, wrong tool to substantially change energy trajectories.)
The second reason is that applying pollution rules to climate challenges has hardly been a lasting strategy (Principle 3). Despite nearly two decades of trying, no regulations for carbon emissions from existing power plants have ever been implemented. It turns out to be very hard, especially with the rise of conservative judiciaries, to write legal regulations for power plants under the Clean Air Act that both stand up in Court and actually yield substantial emissions reductions.
In transportation, pioneering electric vehicle (EV) standards from California – helped along by top-down economic leverage applied by the Obama administration – did indeed begin a significant shift and start winning market share for new electric car and truck companies; under the Biden administration, California doubled down with a new set of standards intended to ultimately phase out all sales of gas-powered cars while the EPA issued tailpipe emissions standards that put the industry on course to achieve at least 50% EV sales by 2030. But California’s EV standards have now been rolled back by the Trump administration and a GOP-controlled Congress multiple times; the same is true for the EPA rules. Lest we think that the Republican party is the sole obstacle to a climate-focused regulatory regime that lasts in the auto sector, it is worth noting that Democratic states led the way on rollbacks. Maryland, Massachusetts, Oregon, and Vermont all paused, delayed, or otherwise fuzzed up their plans to deploy some of their EV rules before Congress acted against California. The upshot is that environmental standards, on their own, cannot politically sustain an economic transition at this scale without significant complementary policies.
Now, we certainly shouldn’t abandon pollution rules – they deliver massive health and environmental benefits, while forcing the market to more accurately account for the costs of polluting technologies, But environmental statutes built primarily to reduce smokestack and tailpipe emissions remain important but are simply not designed to be the primary driver of wholesale economic and industrial change. Unsurprisingly, efforts to make them do that anyway have not gone particularly well – so much so that, today, greenhouse gas pollution standards for most economic sectors either do not exist, or have run into implementation barriers. These observations should guide us to double down on the policies that improve the economics of clean energy and clean technology — from financial incentives to reforms that make it easier to build — while developing new regulatory frameworks that avoid the pitfalls of the existing Clean Air Act playbook. For example, we might learn from state regulations like clean electricity standards that have driven deployment and largely withstood political swings.
To mildly belabor the point – pollution standards form part of the scaffolding needed to make climate progress, but they don’t look like the load-bearing center of it.
Refocusing Industrial Policy
Our plan for the future demands fresh thinking on industrial policy as well as regulatory design. Years ago, Nobel laureate Dr. Elinor Ostrom pointed out that economic systems shift not as a result of centralized fiat, from the White House or elsewhere, but from a “polycentric” set of decisions rippling out from every level of government and firm. That proposition has been amply borne out in the clean energy space by waves of technology innovation, often anchored by state and local procurement, regional technology clusters, and pioneering financial institutions like green banks.
The Biden Administration responded to these emerging understandings with the CHIPS and Science Act, Bipartisan Infrastructure Law (BIL), and Inflation Reduction Act (IRA) – a package of legislation intended to shore up U.S. leadership in clean technology through investments that cut across sectors and geographies. These bills included many provisions and programs with top-down designs, but the package as a whole but did engage with, and encourage, polycentric and deep change.
Here again, taking a serious look at how this package played out can help us understand what industrial policies are most likely to work (Principle 2) and to last (Principle 3) moving forward.
We might begin by asking which domestic clean-technology industries need long-term support and which do not in light of (i) the multi-layered and polycentric structure of our economy, and (ii) the state of play in individual economic sectors and firms at the subnational level. IRA revisions that appropriately phase down support for mature technologies in a given sector or region where deployment is sufficient to cut emissions at an adequate pace could be worth exploring in this light – but only if market-distorting supports for fossil-fuel incumbents are also removed. We appreciate thoughtful reform proposals that have been put forward by those on the left and right.
More directly: If the United States wants to phase down, say, clean power tax credits, such changes should properly be phased with removals of support for fossil power plants and interconnection barriers, shifting the entire energy market towards a fair competition to meet increasing load, as well as new durable regulatory structures that ensure a transition to a low-carbon economy at a sufficient pace. Subsidies and other incentives could appropriately be retained for technologies (e.g., advanced battery storage and nuclear) that are still in relatively early stages and/or for which there is a particularly compelling argument for strengthening U.S. leadership. One could similarly imagine a gradual shift away from EV tax credits – if other transportation system spending was also reallocated to properly balance support among highways, EV charging stations, transit, and other types of transportation infrastructure. In short, economic tools have tremendous power to drive climate progress, but must be paired with the systemic reforms needed to ensure that clean energy technologies have a fair pathway to achieving long-term economic durability.
Our analysis can also touch on geopolitical strategy. It is true that U.S. competitors are ahead in many clean technology fields; it is simultaneously true that the United States has a massive industrial and research base that can pivot ably with support. A pure on-shoring approach is likely to be unwise – and we have just seen courts enjoin the administration’s fiat tariff policy that sought that result. That’s a good opportunity to have a more thoughtful conversation (in which many are already engaging) on areas where tariffs, public subsidies, and other on-shoring planning can actually position our nation for long-term economic competition on clean technology. Opportunities that rise to the top include advanced manufacturing, such as for batteries, and critical industries, like the auto sector. There is also a surprising but potent national security imperative to center clean energy infrastructure in U.S. industrial policy, given the growing threat of foreign cyberattacks that are exploiting “seams” in fragile legacy energy systems.
Finally, our analysis suggests that states, which are primarily responsible for economic policy in their jurisdictions, have a role to play in this polycentric strategy that extends beyond simply replicating repealed federal regulations. States have a real opportunity in this moment to wed regulatory initiatives with creative whole-of-the-economy approaches that can actually deliver change and clean economic diversification, positioning them well to outlast this period of churn and prosper in a global clean energy transition.
A successful and “sticky” modern industrial policy must weave together all of the above considerations – it must be intentionally engineered to achieve economic and political durability through polycentric change, rather than relying solely or predominantly on large public subsidies.
Conclusion
The Trump Administration has moved with alarming speed to demolish programs, regulations, and institutions that were intended to make our communities and planet more liveable. Such wholesale demolition is unwarranted, unwise, and should not proceed unchecked. At the same time, it is, as ever, crucial to plan for the future. There is broad agreement that achieving an effective, equitable, and ethical energy transition requires us to do something different. Yet there are few transpartisan efforts to boldly reimagine regulatory and economic paradigms. Of course, we are not naive: political gridlock, entrenched special interests, and institutional inertia are formidable obstacles to overcome. But there is still room, and need, to try – and effort bears better fruit when aimed at the right problems. We can begin by seriously debating which past approaches work, which need to be improved, which ultimately need imaginative recasting to succeed in our ever-more complex world. Answers may be unexpected. After all, who would have thought that the ultimate best future of the vast oil-fired power station south of the Thames with which we began this essay would, a few decades later, be a serene and silent hall full of light and reflection?
Building an Environmental Regulatory System that Delivers for America
The Clean Air Act. The Clean Water Act. The National Environmental Policy Act. These and most of our nation’s other foundational environmental laws were passed decades ago – and they have started to show their age. The Clean Air Act, for instance, was written to cut air pollution, not to drive the whole-of-economy response that the climate crisis now warrants. The Energy Policy and Conservation Act of 1975 was designed to make cars more efficient in a pre-electric vehicle era, and now puts the Department of Transportation in the awkward position of setting fuel economy standards in an era when more and more cars don’t burn gas.
Trying to manage today’s problems with yesterday’s laws results in government by kludge. Legacy regulatory architecture has foundered under a patchwork of legislative amendments and administrative procedures designed to bridge the gap between past needs and present realities. Meanwhile, Congressional dysfunction has made purpose-built updates exceptionally difficult to land. The Inflation Reduction Act, for example, was mostly designed to move money rather than rethink foundational statutes or regulatory processes – because those rethinks couldn’t make it past the filibuster.
As the efficacy of environmental laws has waned, so has their durability. What was once a broadly shared goal – protecting Americans from environmental harm – is now a political football, with rules that whipsaw back and forth depending on who’s in charge.
The second Trump Administration launched the biggest environmental deregulatory campaign in history against this backdrop. But that campaign, coupled with massive reductions in the federal civil service and a suite of landmark court decisions (including Loper Bright) about how federal agencies regulate, risks pushing U.S. regulatory architecture past the point of sensible and much-needed reform and into a state of complete disrepair.
Dismantling old systems has proven surprisingly easy. Building what comes next will be harder. And the work must begin now.
It is time to articulate a long-term vision for a government that can actually deliver in an ever-more complex society. The Federation of American Scientists (FAS) is meeting this moment by launching an ambitious new project to reimagine the U.S. environmental regulatory state, drawing ideas from across ideological lines.
The Beginning of a New Era
Fear of the risks of systemic change often prevent people from entertaining change in earnest. Think of the years of U.S. squabbles over how or whether to reform permitting and environmental review, while other countries simply raced ahead to build clean energy projects and establish dominance in the new world economy. Systemic stagnation, however, comes with its own consequences.
The Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) are a case in point when it comes to climate and the environment. Together, these two pieces of legislation represented the largest global investment in the promise of a healthier, more sustainable, and, yes, cheaper future. Unfortunately, as proponents of the “abundance” paradigm and others have observed, rollout was hampered by inefficient processes and outdated laws. Implementing the IRA and the IIJA via old systems, in short, was like trying to funnel an ocean through a garden hose – and as a result, most Americans experienced only a trickle of real-world impact.
Similar barriers are constraining state progress. For example, the way we govern and pay for electricity has not kept pace with a rapidly changing energy landscape – meaning that the United States risks ceding leadership on energy technologies critical to national security, economic competitiveness, and combating climate change.
But we are perhaps now entering a new era. The United States appears to be on the edge of real political realignments, with transpartisan stakes around the core role of government in economic development that do not match up neatly to current coalitions. This realignment presents a crucial opportunity to catalyze a new era of climate, environmental, and democratic progress.
FAS will leverage this opportunity by providing a forum for debate and engagement on different facets of climate and environmental governance, a platform to amplify insights, and the capacity to drive forward solutions. Examples of topics ripe for exploration include:
- Balancing agility and accountability. As observed, regulatory approaches of the past have struggled to address the interconnected, quickly evolving nature of climate and environmental challenges. At the same time, mechanisms for ensuring accountability have been disrupted by an evolving legal landscape and increasingly muscular executive. There is a need to imagine and test new systems designed to move quickly but responsibly on climate and environmental issues.
- Complementing traditional regulation through novel strategies. There is growing interest in using novel financial, contractual, and other strategies as a complement to regulation for driving climate and environmental progress. There is considerable room to go deeper in this space, identifying both the power of these strategies and their limits.
- Rethinking stakeholder engagement. The effectiveness of regulation depends on its ability to serve diverse stakeholder needs while advancing environmental goals. Public comment and other pipelines for engaging stakeholders and integrating external perspectives and expertise into regulations have been disrupted by technologies such as AI, while the relationship between regulated entities and their regulators has become increasingly adversarial. There is a need to examine synergies and tradeoffs between centering stakeholders and centering outcomes in regulatory processes, as well as examine how stakeholder engagement could be improved to better ensure regulations that are informed, feasible, durable, and distributively fair.
In working through topics like these, FAS seeks to lay out a positive vision of regulatory reconstruction that is substantively superior to either haphazard destruction or incremental change. Our vision is nothing less than to usher in a new paradigm of climate and environmental governance: one that secures a livable world while reinforcing democratic stability, through systems that truly deliver for America.
We will center our focus on the federal government given its important role in climate and environmental issues. However, states and localities do a lot of the work of a federated government day-to-day. We recognize that federal cures are unlikely to fully alleviate the symptoms that Americans are experiencing every day, from decaying infrastructure to housing shortages. We are committed to ensuring that solutions are appropriately matched to the root cause of state capacity problems and that federal climate and environmental regulatory regimes are designed to support successful cooperation with local governments and implementation partners.
FAS is no stranger to ambitious endeavors like these. Since our founding in 1945, we have been committed to tackling the major science policy issues that reverberate through American life. This new FAS workstream will be embedded across our Climate and Environment, Clean Energy, and Government Capacity portfolios. We have already begun engaging and activating the diverse community of scholars, experts, and leaders laying the intellectual groundwork to develop compelling answers to urgent questions surrounding the climate regulatory state, against the backdrop of a broader state capacity movement. True to our nonpartisan commitment, we will build this work on a foundation of cross-ideological curiosity and play on the tension points in existing coalitions that strike us all as most productive.
We invite you to join us in conversation and collaboration. If you want to get involved, contact Zoë Brouns (zbrouns@fas.org).
Policy Experiment Stations to Accelerate State and Local Government Innovation
The federal government transfers approximately $1.1 trillion dollars every year to state and local governments. Yet most states and localities are not evaluating whether the programs deploying these funds are increasing community well-being. Similarly, achieving important national goals like increasing clean energy production and transmission often requires not only congressional but also state and local policy reform. Yet many states and localities are not implementing the evidence-based policy reforms necessary to achieve these goals.
State and local government innovation is a problem not only of politics but also of capacity. State and local governments generally lack the technical capacity to conduct rigorous evaluations of the efficacy of their programs, search for reliable evidence about programs evaluated in other contexts, and implement the evidence-based programs with the highest chances of improving outcomes in their jurisdictions. This lack of capacity severely constrains the ability of state and local governments to use federal funds effectively and to adopt more effective ways of delivering important public goods and services. To date, efforts to increase the use of evaluation evidence in federal agencies (including the passage of the Evidence Act) have not meaningfully supported the production and use of evidence by state and local governments.
Despite an emerging awareness of the importance of state and local government innovation capacity, there is a shortage of plausible strategies to build that capacity. In the words of journalist Ezra Klein, we spend “too much time and energy imagining the policies that a capable government could execute and not nearly enough time imagining how to make a government capable of executing them.”
Yet an emerging body of research is revealing that an effective strategy to build government innovation capacity is to partner government agencies with local universities on scientifically rigorous evaluations of the efficacy of their programs, curated syntheses of reliable evaluation evidence from other contexts, and implementation of evidence-based programs with the best chances of success. Leveraging these findings, along with recent evidence of the striking efficacy of the national network of university-based “Agriculture Experiment Stations” established by the Hatch Act of 1887, we propose a national network of university-based “Policy Experiment Stations” or policy innovation labs in each state, supported by continuing federal and state appropriations and tasked with accelerating state and local government innovation.
Challenge
Advocates of abundance have identified “failed public policy” as an increasingly significant barrier to economic growth and community flourishing. Of particular concern are state and local policies and programs, including those powered by federal funds, that do not effectively deliver critically important public goods and services like health, education, safety, clean air and water, and growth-oriented infrastructure.
Part of the challenge is that state and local governments lack capacity to conduct rigorous evaluations of the efficacy of their policies and programs. For example, the American Rescue Plan, the largest one-time federal investment in state and local governments in the last century, provided $350 billion in State and Local Fiscal Recovery Funds to state, territorial, local, and Tribal governments to accelerate post-pandemic economic recovery. Yet very few of those investments are being evaluated for efficacy. In a recent survey of state policymakers, 59% of those surveyed cited “lack of time for rigorous evaluations” as a key obstacle to innovation. State and local governments also typically lack the time, resources, and technical capacity to canvass evaluation evidence from other settings and assess whether a program proven to improve outcomes elsewhere might also improve outcomes locally. Finally, state and local governments often don’t adopt more effective programs even when they have rigorous evidence that these programs are more effective than the status quo, because implementing new programs disrupts existing workflows.
If state and local policymakers don’t know what works and what doesn’t, and/or aren’t able to overcome even relatively minor implementation challenges when they do know what works, they won’t be able to spend federal dollars more effectively, or more generally to deliver critical public goods and services.
Opportunity
A growing body of research on government innovation is documenting factors that reliably increase the likelihood that governments will implement evidence-based policy reform. First, government decision makers are more likely to adopt evidence-based policy reforms when they are grounded in local evidence and/or recommended by local researchers. Boston-based researchers sharing a Boston-based study showing that relaxing density restrictions reduces rents and house prices will do less to convince San Francisco decision makers than either a San Francisco-based study, or San Francisco-based researchers endorsing the evidence from Boston. Proximity matters for government innovation.
Second, government decision makers are more likely to adopt evidence-based policy reforms when they are engaged as partners in the research projects that produce the evidence of efficacy, helping to define the set of feasible policy alternatives and design new policy interventions. Research partnerships matter for government innovation.
Third, evidence-based policies are significantly more likely to be adopted when the policy innovation is part of an existing implementation infrastructure, or when agencies receive dedicated implementation support. This means that moving beyond incremental policy reforms will require that state and local governments receive more technical support in overcoming implementation challenges. Implementation matters for government innovation.
We know that the implementation of evidence-based policy reform produces returns for communities that have been estimated to be on the order of 17:1. Our partners in government have voiced their direct experience of these returns. In Puerto Rico, for example, decision makers in the Department of Education have attributed the success of evidence-based efforts to help students learn to the “constant communication and effective collaboration” with researchers who possessed a “strong understanding of the culture and social behavior of the government and people of Puerto Rico.” Carrie S. Cihak, the evidence and impact officer for King County, Washington, likewise observes,
“It is critical to understand whether the programs we’re implementing are actually making a difference in the communities we serve. Throughout my career in King County, I’ve worked with County teams and researchers on evaluations across multiple policy areas, including transportation access, housing stability, and climate change. Working in close partnership with researchers has guided our policymaking related to individual projects, identified the next set of questions for continual learning, and has enabled us to better apply existing knowledge from other contexts to our own. In this work, it is essential to have researchers who are committed to valuing local knowledge and experience–including that of the community and government staff–as a central part of their research, and who are committed to supporting us in getting better outcomes for our communities.”
The emerging body of evidence on the determinants of government innovation can help us define a plan of action that galvanizes the state and local government innovation necessary to accelerate regional economic growth and community flourishing.
Plan of Action
An evidence-based plan to increase state and local government innovation needs to facilitate and sustain durable partnerships between state and local governments and neighboring universities to produce scientifically rigorous policy evaluations, adapt evaluation evidence from other contexts, and develop effective implementation strategies. Over a century ago, the Hatch Act of 1887 created a remarkably effective and durable R&D infrastructure aimed at agricultural innovation, establishing university-based Agricultural Experiment Stations (AES) in each state tasked with developing, testing, and translating innovations designed to increase agricultural productivity.
Locating university-based AES in every state ensured the production and implementation of locally-relevant evidence by researchers working in partnership with local stakeholders. Federal oversight of the state AES by an Office of Experiment Stations in the US Department of Agriculture ensured that work was conducted with scientific rigor and that local evidence was shared across sites. Finally, providing stable annual federal appropriations for the AES, with required matching state appropriations, ensured the durability and financial sustainability of the R&D infrastructure. This infrastructure worked: agricultural productivity near the experiment stations increased by 6% after the stations were established.
Congress should develop new legislation to create and fund a network of state-based “Policy Experiment Stations.”
The 119th Congress that will convene on January 3, 2025 can adapt the core elements of the proven-effective network of state-based Agricultural Experiment Stations to accelerate state and local government innovation. Mimicking the structure of 7 USC 14, federal grants to states would support university-based “Policy Experiment Stations” or policy innovation labs in each state, tasked with partnering with state and local governments on (1) scientifically rigorous evaluations of the efficacy of state and local policies and programs; (2) translations of evaluation evidence from other settings; and (3) overcoming implementation challenges.
As in 7 USC 14, grants to support state policy innovation labs would be overseen by a federal office charged with ensuring that work was conducted with scientific rigor and that local evidence was shared across sites. We see two potential paths for this oversight function, paths that in turn would influence legislative strategy.
Pathway 1: This oversight function could be located in the Office of Evaluation Sciences (OES) in the General Services Administration (GSA). In this case, the congressional committees overseeing GSA, namely the House Committee on Oversight and Responsibility and the Senate Committee on Homeland Security and Governmental Affairs, would craft legislation providing for an appropriation to GSA to support a new OES grants program for university-based policy innovation labs in each state. The advantage of this structure is that OES is a highly respected locus of program and policy evaluation expertise.
Pathway 2: Oversight could instead be located in the Directorate of Technology, Innovation, and Partnerships in the National Science Foundation (NSF TIP). In this case, the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation would craft legislation providing for a new grants program within NSF TIP to support university-based policy innovation labs in each state. The advantage of this structure is that NSF is a highly respected grant-making agency.
Either of these paths is feasible with bipartisan political will. Alternatively, there are unilateral steps that could be taken by the incoming administration to advance state and local government innovation. For example, the Office of Management and Budget (OMB) recently released updated Uniform Grants Guidance clarifying that federal grants may be used to support recipients’ evaluation costs, including “conducting evaluations, sharing evaluation results, and other personnel or materials costs related to the effective building and use of evidence and evaluation for program design, administration, or improvement.” The Uniform Grants Guidance also requires federal agencies to assess the performance of grant recipients, and further allows federal agencies to require that recipients use federal grant funds to conduct program evaluations. The incoming administration could further update the Uniform Grants Guidance to direct federal agencies to require that state and local government grant recipients set aside grant funds for impact evaluations of the efficacy of any programs supported by federal funds, and further clarify the allowability of subgrants to universities to support these impact evaluations.
Conclusion
Establishing a national network of university-based “Policy Experiment Stations” or policy innovation labs in each state, supported by continuing federal and state appropriations, is an evidence-based plan to facilitate abundance-oriented state and local government innovation. We already have impressive examples of what these policy labs might be able to accomplish. At MIT’s Abdul Latif Jameel Poverty Action Lab North America, the University of Chicago’s Crime Lab and Education Lab, the University of California’s California Policy Lab, and Harvard University’s The People Lab, to name just a few, leading researchers partner with state and local governments on scientifically rigorous evaluations of the efficacy of public policies and programs, the translation of evidence from other settings, and overcoming implementation challenges, leading in several cases to evidence-based policy reform. Yet effective as these initiatives are, they are largely supported by philanthropic funds, an infeasible strategy for national scaling.
In recent years we’ve made massive investments in communities through federal grants to state and local governments. We’ve also initiated ambitious efforts at growth-oriented regulatory reform which require not only federal but also state and local action. Now it’s time to invest in building state and local capacity to deploy federal investments effectively and to galvanize regional economic growth. Emerging research findings about the determinants of government innovation, and about the efficacy of the R&D infrastructure for agricultural innovation established over a century ago, give us an evidence-based roadmap for state and local government innovation.
This action-ready policy memo is part of Day One 2025 — our effort to bring forward bold policy ideas, grounded in science and evidence, that can tackle the country’s biggest challenges and bring us closer to the prosperous, equitable and safe future that we all hope for whoever takes office in 2025 and beyond.
PLEASE NOTE (February 2025): Since publication several government websites have been taken offline. We apologize for any broken links to once accessible public data.