Organically, absolutely. /cityname-state-keyword , /cityname2-state-keyword
Locally (Google Local), it is a bit trickier, and is not something you would be wise to count on. In smaller communities, that are pretty close together, and where there isn't a lot of competition, it happens all the time. But as the population/competition goes up, where you are located (cityname) is a barrier that even the best campaigns can't get over.
I would recommend that you have the local landing pages and rank them organically, whilst taking a shot at ranking locally for the same, using your home page likely. If it doesn't work out, your organic ranking in the city you aren't located in, may suffice. Otherwise, you could always get another address and phone for that other city, but there may not be enough biz there to warrant it.
Good luck!
-Adam