Your assumptions about the flexibility and transferability of a municipal employee's skillset are doing a lot of heavy lifting.

Not at all. Assuming a city has a mix of people with database, web and security experience is perfectly reasonable. You can definitely find someone capable enough to run manage the project, and as I said what needs to can still be outsourced.

Are these proficient people not already doing something with their time?

If yes, do you hire someone else to replace the work they were doing?

If no, sounds like a lot of slippage.

Have you never worked at a large company?

People don't always have their billable hours fully booked.