"The Palace at Midnight," by Robert Silverberg. First published in Omni, July 1981 issue. I first encountered it in a paperback science fiction anthology: After Armageddon. According to the ISFDB link, the story has been reprinted several times.
Your memory of the place names is off. The main viewpoint character is Tom Christensen, the foreign minister of the Empire of San Francisco. As the story begins, he is awakened by the telephone. He is sleeping off a hangover from an all-night party he attended. He learns that an ambassador from the Republic of Monterey wishes to speak with him today on something urgent. The ambassador, Ms. Elaine Sawyer, is someone he has never heard of before. I gather that "Ambassador" is a very temporary title, as she has just arrived on a special diplomatic mission, instead of being the permanent head of an embassy located in San Francisco. (I don't think any such permanent embassy is even mentioned as existing.)
We soon learn that Ambassador Sawyer is also a member of the Senate of Monterey, and that Monterey is getting nervous about the territorial ambitions of San Jose. But she's here to mention a serious problem that the Empire might like to nip in the bud after she's warned them about it. Which might result in a public display of solidarity between the Empire and the Republic, which, in turn, might discourage San Jose from trying to invade the Republic if its northern neighbor, the Empire, is likely to take offense.
Near as I can tell, the "Empire" is not nearly as large as you might think from the name; it controls some of what we call the San Francisco Bay Area, including Oakland and Berkeley, but I'm not sure if it extends much further than that. San Jose, a seaport located at the south end of the Bay, has become a separate nation in this post-apocalyptic world. In the real world, the city of Monterey is about 51 miles south of San Jose (on the map), or about 72 miles south (if you go from one to the other by car). I've never set foot in California in my life, so I had to check these things.
Here's the final paragraph of the story.
He looked toward the East. In a few hours the sun would be coming up
over that hill, out of the place that used to be the United States of
America and now was a thousand thousand crazy fractured entities.
Christensen shook his head. The Grand Duchy of Chicago, he thought.
The Holy Carolina Confederation. The Three Kingdoms of New York. The
Empire of San Francisco. No use getting upset -- much too late for
getting upset. You played the hand that was dealt you and you carved
little islands of safety out of the night. Turning to her he said,
"I'm glad you came home with me tonight." He brushed his lips lightly
against hers. "Come. Let's go inside."