Rapid developments in new technologies and the explosion in digital connectivity have led to a growing recognition of the importance of knowledge management as a critical resource for competitive advantage. These developments present both opportunities and challenges for governments, who are compelled to adopt new management tools and techniques. As such improved knowledge management has become essential for public sector organizations at national, regional and local levels. The creation and transfer of knowledge has become a critical factor in the public sector organizations' quest for high quality decision-making, and service delivery. Communicating professional knowledge is a key ingredient in KM processes. This paper examines the key issues and communication challenges faced by small municipalities in their endeavour to implement knowledge management programs. It draws its material from a survey data collected from a small municipality in Norway. The paper highlights the role of adequate and inadequate communication behaviour patterns for knowledge transfer at local government levels.