The value of Artificial Intelligence (AI) in augmenting or even replacing human decision-making in the organizational context is gaining momentum in the last few years. A growing number of organizations are now experimenting with different approaches to support and shape their operations. Nevertheless, there has been a disproportionate amount of attention on the potential and value that AI can deliver to private companies, with very limited empirical attention focusing on the private sector. The purpose of this research is to examine the current state of AI use in municipalities in Norway, what future aspirations are, as well as identify the challenges that exist in realizing them. To investigate these issues, we build on a survey study with respondents holding IT management positions in Norwegian municipalities. The results pinpoint to specific areas of AI applications that public bodies intend to invest in, as well as the most important challenges they face in making this transition.