No one can abuse you without your permission. I'm sure both bosses are happy as clams with the way things are, because Karen is a whiny little bitch (doesn't "want" to do her job from home, despite it being, you know, her JOB?), and so your taking over her job for free makes their life easier. So of course they will continue to assume that things are fine; in fact, they will encourage you to keep doing the work, because that makes their lives easier than having to deal with each other and Karen and, you know, develop a plan.
The only way to change things is to make it more difficult to get you to do the job than it is for them to develop a plan and get Karen off her ass. Doesn't mean you need to be angry or personally difficult to deal with; in fact, these things tend to go much better when you can stay calm and friendly and wanting to help while still refusing to be moved.
I think you have a very good story here to sell -- you took the job with a clear understanding of what your role would be; you understand that the pandemic threw everyone for a loop, and so you have jumped in and tried to help out wherever you could to get the city over the hump; but that now that the immediate need (furloughs) has been met and it is clear this is going to be a longer-term issue, you are no longer able to continue to serve these additional roles as of, say, a week from Friday, and you are more than happy to work with them to transition everything back smoothly.
Note that it seems particularly galling that Karen can pull the "I can't work from home" line, but that the result is that you are expected to then do the exact same job from, you guessed it, home. So if they feed you a story about how poor Karen just can't do the job from home because XYZ, you can calmly point out that you have been doing that very job under those very constraints. Bonus points if you can look slightly confused and indicate that you don't understand, because you also have [access issues/childcare issues/logistical problems, etc.], but you have been able to work around them, and of course you'd be happy to pass along to Karen what you figured out about how to manage those issues.