In its simplest form, smart government can be understood as the combination of new technologies and organizational innovation strategies to further modernize the public sector. Within this development, the Internet of Things (IoT) often forms a key technological foundation, offering government authorities new possibilities for inter-action with citizens and local communities. On one hand, citizens can indirectly partic-ipate in governmental services’ value creation by using public infrastructure or (un)knowingly sharing their data with the community. On the other hand, smart gov-ernment initiatives may rely more intensively on citizens’ active participation to im-prove public service delivery, increase trust in government actions, and strengthen community sentiment. In this chapter, we discuss active and passive participation sce-narios of smart government initiatives and explain how sensor-based systems may en-hance citizens’ opportunities to participate in local governance. We present two prac-tical cases from Switzerland demonstrating these two citizen involvement modes. We argue that active and passive participation of citizens and other stakeholders play key role in generating necessary data for algorithmic decision-making to enable personal-ized interaction and real-time control of infrastructure in the future. We close with a discussion of the possibilities and boundaries of the IoT in the public sector and their possible influences on citizens’ private lives and policy-making.