Highly sophisticated capabilities of artificial intelligence (AI) have skyrocketed its popularity across many industry sectors globally. The public sector is one of these. Many cities around the world are trying to position themselves as leaders of urban innovation through the development and deployment of AI systems. Likewise, increasing numbers of local government agencies are attempting to utilise AI technologies in their operations to deliver policy and generate efficiencies in highly uncertain and complex urban environments. While the popularity of AI is on the rise in urban policy circles, there is limited understanding and lack of empirical studies on the city manager perceptions concerning urban AI systems. Bridging this gap is the rationale of this study. The methodological approach adopted in this study is twofold. First, the study collects data through semi-structured interviews with city managers from Australia and the US. Then, the study analyses the data using the summative content analysis technique with two data analysis software. The analysis identifies the following themes and generates insights into local government services: AI adoption areas, cautionary areas, challenges, effects, impacts, knowledge basis, plans, preparedness, roadblocks, technologies, deployment timeframes, and usefulness. The study findings inform city managers in their efforts to deploy AI in their local government operations, and offer directions for prospective research.