Updating open street map streets

My city is also maintaining roads in OpenStreetMap. As far as I know they do it very manually, though, using the editor JOSM, just as many regular mappers do. Be aware that there are certain license requirements on the data you add. If your data source ("xml file that has all the new streets on it that we got from our gis department") does not comply to the requirements laid out in the terms yoo must not use it to add roads to OSM or change them.

If the source is legit to use then by all means go ahead making appropriate changes in OSM. As long as you do it manually (you can overlay your data source on the map in the editor and draw the road by hand then) there shouldn't be a big problem. If you are talking about huge amounts of data that you would rather like to automatically import it gets tricky. There are many hurdles to overcome, technically and in alignment with the OSM community. You can start reading about that on the wiki.

I am no expert, this is my guess. It is probable that the GIS data you would like to use is based on commercial copyrighted maps. I am fairly sure that would mean it CANNOT be used to update OSM. You could put notes on the Standard Layer indicating where a new street is, This may encourage mappers to survey them, Maybe you? Perhaps a link to a source of some open data, like street names and postal codes could be put into the note. But you would have to make sure that, the data is open.