AI has the potential to revolutionize local government operations, but American cities face significant challenges in adopting these technologies. In interviews with more than 150 local leaders across dozens of U.S. cities, respondents consistently reported three problems: sclerotic and siloed bureaucracies, burdensome regulations, and risk aversion. AI, however, could be a turning point. Cities have successfully deployed AI to: automate tasks, make better decisions with data, and better engage with the community. The key factors in the cities that have done this successfully are: clear vision and strategy, systematic de-bottlenecking, public-private partnerships, and adherence to governance principles.