San José’s Bold Plan to Lead the AI Revolution in City Government

Artificial intelligence is moving out of tech boardrooms and into city halls. What was once the domain of tech giants is now becoming a practical tool for governments reshaping how they deliver services, support workers, and plan for the future. Few places are leaning into this moment as boldly as San José, CA.

When I spoke with San José’s Mayor Matt Mahan, he painted a picture of a city not chasing hype, but building substance. San José is launching an AI Upskilling Program to train its workforce, leading a GovAI Coalition that now connects hundreds of agencies across the country, and is pioneering the AI Incentive Program, the first city-run grant initiative of its kind.

Taken together, these moves tell a larger story. San José is not just experimenting with AI. It’s showing what a forward-looking city can do when innovation is matched with purpose, responsibility, and ambition.

San Jose’s AI Workforce Training Initiative

One of the clearest signs of San José’s commitment to AI is its AI Upskilling Program, a training effort in partnership with San José State University. The initiative runs for 12 weeks and asks city staff to spend just an hour at a time learning skills they can immediately apply. Not abstract theory. Real tools. Real use cases. Staff aren’t just hearing or reading about AI. They’re building custom AI assistants and testing them against the everyday challenges of government work.

The results are already striking, saving teams between 10,000 and 20,000 hours of staff time, with some departments seeing productivity rise by as much as 20%. That means backlogs cleared. New projects launched. Services delivered faster to residents. When I spoke with Mayor Matt Mahan, I wanted to dive deeper into this program including learning more about its goals, its impact, and what it means for the future of government work.

What inspired San José to launch an AI Upskilling Program for city employees, and how were the training goals determined?

Mayor Mahan: In an era in which you can have nearly anything delivered to your doorstep in hours with just the click of a button, government inefficiency becomes all the more obvious. We’ve all watched productivity in the private sector surge over the last 50 years, but productivity in the public sector has remained relatively flat. In San José, we quickly recognized that AI could either continue to widen that gap, or help us close it.

Our AI Upskilling program is designed to do exactly that: empower city staff to use AI responsibly and effectively to improve public services. It’s about saving time and increasing capacity. The program has already saved city employees between 10,000 to 20,000 hours, and some departments have reported a 20% productivity bump in certain functions.

Our goal is to train every IT employee and then expand to over a thousand trained staff citywide next year. We set ambitious targets because we understand how quickly this technology is evolving – and we’re committed to making sure our workforce is prepared to meet that change head-on. We’re proud to be one of the first major cities to launch AI training at this scale, and we’re excited about what it means for the future of public service.

Can you share specific examples of how AI has helped city departments save time or reduce costs since the program began?

Mayor Mahan: My examples are people – people like Andrea in our Department of Transportation, who used a custom AI assistant to secure $12 million in federal funding for electric vehicle chargers. When the grant was suspended in early 2025 due to changes under the new presidential administration, she was able to quickly pivot and apply her new technical skills and custom GPT she created to apply for and secure a $2.5 million Metropolitan Transportation Commission grant for 60 new EV chargers across six community centers and libraries in underserved neighborhoods.

Another city staffer named Stephen, from our IT department, created a custom AI assistant to analyze and categorize unstructured text in the “Other Issues” section of 311 service reports. The tool automatically identifies recurring themes, such as “Junk Removal” and “Water Issues,” which saves staff over 500 hours annually by streamlining the process of categorizing and addressing resident concerns. We provide the training but it’s the talented people within our departments that use it creatively to help better serve our residents.

We do not see AI as a replacement for real human labor – it’s a tool to make it more productive. By handling routine, time-consuming tasks, we believe these tools can free up staff to focus on the higher-value interactions with constituents that really matter.

How is the city ensuring that employees are trained to use AI responsibly and ethically in their daily work?

Mayor Mahan: San José has long been a leader in data privacy. We were one of the first cities in the country to produce Generative AI guidelines for employees, we’ve hired staff specifically focused on ensuring we are protecting residents’ data, we’ve participated in programs like Bloomberg Philanthropies City Data Alliance and we developed procedures and standard practices including a 3 Year Citywide Data Strategy.

Every course in the AI Incentive Program emphasizes the ethical use of AI, transparency, and regular bias checks. We’ve built in these safeguards from the start, so employees know not just how to use these tools, but how to use them responsibly.

This early work to ensure responsible use has given city staff the latitude and confidence to experiment. Because they know the right rules and procedures to protect the public, they can explore technological solutions without fear.

Inside the GovAI Coalition: How San José Is Leading a Nationwide AI Movement

In addition to training their own city employees, San José is helping governments across the country learn how to use AI responsibly. In 2023, the city launched the GovAI Coalition with about 50 agencies. Today, that network has grown to more than 850 local, state, and federal agencies, collectively serving over 150 million Americans.

The coalition functions as a kind of “lab of democracy,” where agencies share open-source tools, best practices, and real-world lessons to improve how public services are delivered. This collaborative approach highlights San José’s ambition to make government adoption of AI safer, faster, and more effective. It’s this vision I wanted to explore further in my conversation with Mayor Mahan.

What role did San José play in founding the GovAI Coalition, and how has the coalition grown since its launch?

Mayor Mahan: Back in 2023, we began implementing our AI governance framework, which included asking tech vendors tough questions about privacy and data use in emerging AI technologies – questions many other cities were also grappling with. With little guidance coming out of higher levels of government and recognizing the need for collective action to promote improved vendor accountability, we convened over 50 government agencies to share best practices, tools, and lessons learned, so no one had to start from scratch.

Since then, that initial gathering has grown into the GovAI Coalition, a nationwide network of more than 850 local, state, and federal agencies, representing over 150 million Americans. Today, it functions as a "lab of democracy," where governments collaborate and exchange practical, open-source solutions to make public services faster and more effective.

Unlike in the private sector, cities aren’t competing against each other. In fact, we have the same goal of serving our residents and are often facing the same big, societal problems. I believe that the GovAI coalition will help us match or even exceed the implementation of AI in the private sector because we have hundreds of cities all piloting different programs and sharing what’s working and what isn’t.

How are the open-source civic AI tools being used by member agencies, and what impact are they having on public service delivery?

Mayor Mahan: Agencies are currently using foundational models we’ve created together for purposes like language translation. 9 Cities contributed 27,000 language translation pairs to develop a functioning GPT for various languages.

Various Cities have amended and then adopted our AI Policy Manuals and other documents. Assets like our AI Contract Repository Hub with Pavilion helps guide legal and procurement teams as they purchase new technologies. The hub holds executed contracts between public agencies and vendors and can help agencies grapple with critical negotiation terms like indemnity in the modern context of LLMs.

The Coalition’s AI FactSheet has been adopted by numerous vendors that frequently partner with public agencies. Many vendors choose to publicly share their answers to the AI FactSheet online, like Polimorphic. This trend of increased transparency from AI vendors enables critical information about AI systems to be accessed by the general public and end users. This allows Government Buyers to better understand a company’s privacy and AI posture before they even take the first meeting.

What are some of the biggest challenges in scaling AI adoption across 700+ government agencies, and how is the coalition addressing them?

Mayor Mahan: The goal of the GovAI coalition isn’t to scale AI adoption across all member agencies. It’s to empower agencies to scale AI in their own city or department. Because San José is both a big city and located in the heart of Silicon Valley, we have the capacity and know-how to do some of the preliminary work that most smaller cities aren’t capable of. When new members join, they have access to resources that would have taken months if not years to create from scratch. They aren’t starting from zero, they’re starting with a foundation that will help them succeed, protect the data of their residents, and give them the confidence to innovate.

This is good for the rest of the members of the coalition because they return the favor – sharing their learnings if/when they implement their own technological solutions.

How San José is Fueling Startups and Public Innovation

San José is investing directly in innovation, launching the AI Incentive Program which is the first city-run grant program of its kind in the United States. The program is designed to give early-stage AI companies the resources to scale solutions that address real-world challenges.

The initiative provides a mix of cash grants and pro bono professional services, from legal and IT consulting to real estate support, helping startups gain the foundation they need to thrive. Last month, San José announced the program’s four inaugural winners, chosen from more than 170 applicants. Their projects range from tackling maternal health and reducing food waste to advancing the next generation of satellite data processing. Each company will receive up to $50,000 in funding along with access to NVIDIA’s Inception program, venture capital office hours, and other professional resources.

It’s a bold step that reflects San José’s broader strategy of strengthening the innovation economy, encouraging job creation, and using AI as a driver of public problem-solving. This forward-thinking approach is what I wanted to explore further in my questions to Mayor Mahan.

Why did San José decide to create the first city-run AI grant program in the U.S., and what criteria were used to select the inaugural winners?

Mayor Mahan: The AI Incentive Program is part of San José’s broader strategy to become a national model for responsible, practical AI adoption in the public sector. We want innovation to actually make a difference in people’s lives and help us take on some of the big challenges our city is facing.

This program is also about boosting our local economy. By backing startups early on, we’re helping them put down roots here in San José – creating jobs, building partnerships, and fueling long-term growth.

We were honestly blown away by the number and quality of the applicants we received. Out of 170 applicants, the four winners were selected through a competitive review process led by a panel of judges from leading tech organizations – IBM, CBRE, Coactive, and J2 Ventures.

We see the winning companies as some of the most promising and mission-driven AI innovators in the country. They were evaluated on several criteria: civic impact, or potential to solve real public challenges, growth potential for the business, and ethical AI standards, or how they’re focused on responsible development and deployment practices. Companies also had to show they’re serious about being part of the San José community, whether that’s hiring locally or leasing a downtown office space.

But frankly, whether the companies succeed or fail, we still benefit. If they succeed, we may have the next NVIDIA headquartered in San José. If they fail, their employees enter our talent pool – they’ll either start another company or help existing companies in the local economy succeed.

What outcomes does the city hope to achieve through the AI Incentive Program in terms of job growth and innovation?

Mayor Mahan: San José is the AI Capital of the world – not just in words, but through measurable results. To keep that title, we need to continue creating high-quality jobs, especially in our downtown core, boosting local tax revenues to support essential public services, and helping local AI startups demonstrate how responsible innovation can truly improve lives. If we can build a thriving, inclusive AI ecosystem here, it can serve as a model for other cities across the country, multiplying the benefits nationwide.

We also believe in the immense potential of the South Bay and specifically the resources we hold as the largest city in Northern California. We want to be a platform for novice and veteran founders to find resources, connections, and ultimately an opportunity to build long lasting and sustainable businesses.

How do the winning startups—Elythea, MetafoodX, Clika, and Satlyt—align with San José’s vision for responsible, real-world AI?

Mayor Mahan: Each of our winners embodies what we mean by real-world, responsible AI. They all have the same goal we do – to use AI to make life better for everyone.

• Elythea - Given people of color are often the most impacted by high risk pregnancies and health disparities, any technology that can begin to address those gaps is immensely valuable. San José is a city of immigrants where nearly 40% of our residents are foreign born. The focus of enhancing maternal health and healthcare, will have a direct impact on San José residents locally.
• Metafoodx - Food waste is a near universal problem in all major American cities. While large corporate restaurants and food chains can leverage millions of dollars to optimize their supply chains and reduce waste, smaller restaurants and food services similarly need reasonably priced solutions if they are also to advance sustainability in food. Companies like Metafoodx have already been adopted and evaluated by local food providers and are the type of scalable solution that will allow San José to continue to be at the forefront of sustainability.
• CLIKA - Energy usage and availability are critical focuses for the City of San José, as we are one of the few municipalities in the country that has the capacity to triple our electricity supply across the next five years. While we focus on infrastructure, we should also be equally invested in finding ways of reducing the power consumption of individual models. CLIKA helps address this issue by compressing common AI models with little impact on efficiency. This offers a pathway for utilization to increase without a consistent rise in electrical consumption, thus reducing the demands on our grid and infrastructure.
• Satlyt - Similar to CLIKA above, we should be focused on finding ways to reduce the power consumption associated with the use of AI and LLMs. An underutilized resource is the computing power of satellites that are not being operated at their maximum capacity. By establishing a decentralized network, our data centers are no longer required to solely be terrestrial, they can also occur in space. This can reduce the demand on land, terrestrial electricity, and water associated with AI.

San José is showing what it looks like when a city treats innovation as strategy, not slogan. It’s training its own workforce to use AI with confidence. It’s pulling together hundreds of governments through the GovAI Coalition to share what works—and what doesn’t. And it’s backing startups that are tackling urgent, high impact problems such as food waste and maternal health.

My conversation with Mayor Mahan underscored a simple but powerful message: when governments lead with vision and responsibility, AI can become not just a tool for efficiency, but a catalyst for stronger communities and brighter futures.