Municipal and county leaders across the United States are confronting a complex landscape of economic pressures, yet new research shows they remain committed to strategic investments that support community growth and resilience. Travelers recently conducted a survey of public entity employees with risk management responsibilities, and it reveals how these decision-makers are adapting their priorities in response to inflation, funding uncertainties, and evolving social challenges.

The research paints a picture of public sector leaders who, despite facing constraints, continue to invest thoughtfully in their communities. Their approach reflects both pragmatism and vision—balancing immediate fiscal concerns with long-term community needs. One key finding stands out: while the challenges facing public entities appear more complex than ever, many demonstrate remarkable adaptability in how they allocate resources and support their communities.

Where Public Entities Are Investing

The survey identified clear patterns in how municipalities and counties prioritize their investments. Economic development leads the way, with 43 percent of respondents currently investing in this area and 13 percent identifying it as their top priority. These investments encompass efforts to create opportunities for local businesses, foster entrepreneurship, and lay the groundwork for sustainable growth.

Public safety follows closely behind, with 40 percent of public entities currently investing in this critical area and 12 percent ranking it as their highest priority. These investments include enhanced training programs for emergency responders, ensuring recreational facilities meet accessibility standards, and improving community awareness of emergency response protocols.

Infrastructure rounds out the top three priorities, with 38 percent of respondents focusing on development and maintenance in this sector. This emphasis on infrastructure reflects its fundamental role in community functionality and quality of life. The specific areas of focus reveal the breadth of infrastructure needs: roads and highways top the list at 47 percent, followed by water supply systems at 46 percent and public transit systems at 45 percent. Building construction, wastewater treatment facilities, and telecommunications infrastructure also receive significant attention.

Interestingly, when it comes to infrastructure investments, public entities are showing a preference for revitalization over new development. Fifty-three percent plan to focus on revitalizing existing projects rather than building from scratch—a strategy that often allows communities to improve quality of life while managing limited budgets more effectively.

Shifting Concerns Reshape Investment Strategies

The economic environment has significantly influenced how public entities think about risk and investment. Over a 12-month period, concerns about inflation have intensified, with 42 percent of respondents reporting they are more worried about inflation than they were the previous year. This heightened concern reflects the reality of rising costs for goods and services that directly impact public sector budgets.

Beyond inflation, other concerns have also grown more prominent. Forty percent of respondents report increased worry about economic uncertainty, while 39 percent express greater concern about environmental risks such as pollution. Energy costs trouble 37 percent more than in the previous year, and 36 percent are increasingly concerned about issues related to unhoused populations and immigration.

Public attitudes toward government have also become a more significant concern for 34 percent of respondents, while cyber threats worry 33 percent more than they did previously. These shifting priorities reflect the dynamic nature of challenges facing public entities and influence how they allocate resources and manage risk.

Notably, concerns about law enforcement present a more mixed picture. While 28 percent of respondents report being less worried about law enforcement as an emerging risk compared to 12 months ago, 42 percent say their concern level remains unchanged, suggesting varied experiences across different communities.

Workforce Well-Being Emerges as Strategic Priority

One of the most significant trends in public sector investment involves a growing recognition that supporting employees—particularly first responders—is essential to maintaining effective services. An impressive 83 percent of municipalities and counties now invest in mental health programs specifically designed for law enforcement officers, firefighters, and paramedics who regularly face high-stress and high-risk situations.

These mental health initiatives take various forms. Public entities are providing access to counseling and therapy services with licensed professionals who specialize in trauma and stress. They’re implementing regular training and education programs that help officers recognize signs of stress, burnout, and PTSD. Peer support groups create spaces where first responders can share experiences and support one another. Additionally, many organizations have established mental health leave policies and ensure that insurance coverage includes robust mental health services.

The investment in workforce well-being extends beyond first responders. Twenty-seven percent of municipalities and counties invest in broader support services for all employees. Among these entities, 91 percent offer employee assistance programs, 69 percent provide health and wellness programs such as fitness classes and health screenings, and 65 percent have established recognition and reward programs. While 5 percent consider employee support services a top investment priority, this percentage marks growing awareness of how these programs positively impact employee well-being, productivity, and retention.

Economic Headwinds Present Ongoing Challenges

Despite their commitment to community investment, public entities face significant economic obstacles. Nearly all surveyed organizations (98 percent) report that inflation influences their investment decisions, forcing careful consideration of how to balance community needs with fiscal responsibility.

The impact of inflation manifests in specific ways. Thirty-three percent of respondents note that inflation affects their technology investments, leading many to adjust their technology plans, prioritize digital transformation in phases, and leverage cloud-based services to maximize limited budgets. Service contracts feel the pressure too, with 31 percent reporting impacts in this area. Many municipalities and counties respond by exploring long-term contracts and cooperative purchasing agreements to stabilize costs. Materials and supplies, also affected for 31 percent of respondents, have prompted public entities to adopt sustainable sourcing and bulk purchasing strategies to mitigate price fluctuations.

Adding another layer of complexity is uncertainty around federal funding. While 81 percent of surveyed public entities receive most of their funding from state government, half also depend on federal funding. This dual reliance creates vulnerability, as unpredictability in federal budget allocations can force communities to de-prioritize or abandon projects altogether. The uncertainty complicates long-term planning and may cause public entities to take more cautious approaches to new initiatives, potentially slowing innovation and progress. Critical projects that could provide essential resources and support to residents may face delays as a result.

Adapting to Meet Community Needs

The research reveals that public entities have embraced adaptability and creativity in meeting economic, social, and financial challenges. Through project reprioritization, increased investment in mental health support, and focus on comprehensive long-range planning, municipalities and counties continue meeting community needs while navigating economic headwinds.

As public sector leaders look ahead, their approach appears to balance realism with optimism. They acknowledge the constraints they face while remaining committed to the fundamental mission of serving their communities. The combination of strategic thinking, willingness to adapt, and focus on both infrastructure and human capital suggests that many public entities are positioning themselves to weather current challenges while building foundations for future growth. In an environment marked by uncertainty, this measured approach to investment and risk management may prove essential to sustaining resilient, thriving communities.

To access the full report from Travelers, click here. &