Many years ago I was part of a SaaS startup for which local governments were one of our target markets. During our beta we quickly gained interest from the relevant department of the city and were then led on by them for the better part of a year before we went under. This behavior seems consistent with a lot of the comments that have already been posted.
One of the biggest hurdles for us besides the timeline, which I haven't seen mentioned yet, was compliance. The city had a very antiquated security checklist they wanted us to satisfy which was written exclusively for their existing on-prem software deployments in a MS ecosystem, and thus impossible to meet as a SaaS provider. I suspect many smaller municipalities will present you with the same nonsense. In our case, this was not what ultimately killed us, but based on this experience I would advise you to avoid putting all your eggs in one basket and perhaps avoid altogether working a government that is not ready for SaaS once you find out that is the case.
One of the biggest hurdles for us besides the timeline, which I haven't seen mentioned yet, was compliance. The city had a very antiquated security checklist they wanted us to satisfy which was written exclusively for their existing on-prem software deployments in a MS ecosystem, and thus impossible to meet as a SaaS provider. I suspect many smaller municipalities will present you with the same nonsense. In our case, this was not what ultimately killed us, but based on this experience I would advise you to avoid putting all your eggs in one basket and perhaps avoid altogether working a government that is not ready for SaaS once you find out that is the case.