Introduction. Since the end of the 20th and beginning of the 21st centuries, all areas of social management, including public management, have been seriously influenced by modern digital technologies, which, on the one hand, create new opportunities to increase the efficiency of management activities; on the other hand, they pose certain risks, potentially provoking digital inequality. The article presents an analysis of the prerequisites and causes of digital inequality in municipalities. The criteria for such inequality are identified and generalized. An attempt was made to find out the attitude of local governments and citizens, living under digital lockdown, towards the digital transformation of public administration and local economy. Proposals have been made to level the digital divide in municipalities. Theoretical analysis. The problem of digital inequality has been the focus of attention of researchers for over 20 years. However, the scientific discourse on digital inequality is still fragmented: there is no universal interpretation of this phenomenon in the theoretical aspect; there are no uniform parameters for measuring it, and no algorithm for overcoming it has been developed. It is noted that approaches to understanding digital inequality and its consequences have undergone major changes: from unhindered access to the Internet to a person’s request to use digital resources, including those in the field of local government. Empirical analysis. The analysis of the legal regulation of digital transformation was carried out. As a result, it was concluded that flexible or “soft” legal regulation of the digitalization of public administration currently prevails. It is indicated that a special federal law regulating the process of digital transformation in the public administration system and in the local government system, respectively, has not been adopted in the Russian Federation. The criteria for assessing the digital inequality of Russian subjects, the possibility and feasibility of scaling them to the level of local government were analyzed. Results. Based on the results of the study, it is shown that at the local government level, digital inequality is an urgent problem that has a complex technological, socio-economic, socio-cultural and legal nature. It has been proven that there has been a transformation in the essence and understanding of digital inequality: from the problem of access to digital technologies to ensuring equal conditions for citizens to exercise their constitutional rights through such technologies, including the right to local self-government. A proposal for a special program approach has been made to overcome the digital divide in municipalities.