Benefits of Introducing Artificial Intelligence into the Operations of Local Self-Government Units in the Republic of Croatia

The increasing complexity of tasks in managing local policies requires additional resources, which raises costs. Local self-government units (hereinafter: LGUs) base their operations on budgetary financing through the management of revenues and expenditures. The budget finances activities within the scope of local self-government. However, due to rising living standards, planned revenues often cannot cover the required expenditures. Expenditures most frequently occur in the procurement of goods, works, and services. Therefore, LGUs resort to project financing, where goods, works, and services are acquired through the public procurement system. In determining procurement criteria, LGUs, as contracting authorities, are guided by the principle of obtaining “the best value for money.” Understanding what constitutes the best value requires assessments and analyses of what is being procured. Artificial intelligence, as a “social phenomenon,” can significantly reduce costs while also improving local living conditions. This paper will examine key areas of AI application in LGU operations, ranging from public procurement, financial management, infrastructure and traffic management, and energy management to public safety and beyond. Through the analysis of public procurement processes, with a focus on AI implementation in the Republic of Croatia, the paper will explore financial, technical, and social challenges, as well as ethical issues. The results will present future trends in the potential implementation of AI in the regular operations of LGUs. The aim of the paper is to demonstrate possible social benefits and perspectives of AI use in LGUs, while respecting the balance between technological advancement and ethical standards.