Will the public transportation for nozawa onsen back to nagano city continue after the fire festival? If not, what are the best options for getting back to nagano city after the fire festival?
To reach Nagano City from Nozawa Onsen, you would take the Nozawa Onsen Liner (or Nagano Dentetsu Nozawa line) bus from Nozawa to Iiyama Station, then take the train back to Nagano City.
The last bus back from Nozawa is at 19:35, so you would need to instead get a taxi from Nozawa to Iiyama Station to take the train back to Nagano City. The taxi will cost about 5,000 yen or more.
The last Nagano-bound local train departs Iiyama Station at 22:38, and the last Nagano-bound shinkansen departs Iiyama Station at 22:51.
I hope that helps answer your question.