Data governance has emerged as a promising approach for transforming organizations. While governing data as an organizational asset has clear benefits, no previous studies have reported on the particular challenges faced by practitioners in local government organizations. Against this backdrop, we investigate why it is difficult for local government organizations to explore and exploit their data assets with data governance. Following an engaged scholarship approach, we carried out six group interviews conducted with 34 representatives from 13 different Danish municipalities. From the analysis, we identified nine challenges relating to three overall themes that are critical to governing data in local government: (1) data value and overview, (2) data practices and collaboration and (3) data capabilities and politics. We explain how the three themes extend previous research in data governance and e-government literature. The implications for practice and directions for future research are discussed.