First, government provides services that cannot be offered in a manner similar to a for profit business. If all government services could be provided by private business at a profit, private business would certainly be providing those services. The fact that most government services cannot be provided in a profitable or even self sustaining manner means that government cannot be run like a business. All one has to do is try to envision police or fire departments being operated in a for-profit business manner to see why this concept is unworkable.
Second, private businesses are not subject to the public scrutiny, regulations, or management options that local governments are. A business can write off a group of difficult customers; government cannot. All citizens, no matter how disagreeable or problematic are entitled to services.
Third, government does not have a monopoly on inefficiency. Businesses have the ability to cover mistakes and inefficiencies while increasing prices to cover the costs of mistakes. Local government does not have this luxury as everything it does is subject to public scrutiny.