This is most likely coming from the city entered in the employer address of a W-2 or 1099 form. City 1 should be the first W-2 or 1099.  Sometimes the state form allows fewer characters than the federal form. It is corrected in the federal portion and will then flow properly to the state return.

• Click on the Federal Taxes tab  
• Click on Wages and Income    
• Select Edit/add for your W-2.   
• For Employer address, make the name shorter, from the end. (This will not affect the tax calculations)  
• Select Continue  
• Go back to the top and select Review and Check My Info. If the city is short enough, you should get the message, "You’re good to go! Ready to file."  

Note: Shorten the name from the end, as the tax authority will be matching the first few characters against the Employer ID number.  Also, if you imported the entry originally, try deleting it and select to Enter it Myself.  If there was something on the import triggering the error message, that will work around the problem.