It makes complete sense for local governments to run local water companies. We have both public and for-profit companies in my country. The city run companies charge less than half as much, pay their employees more, and have fewer contaminants in their water, according to several articles I have seen in the local papers. For-profit highways are also more expensive and rarely even less congested. No one has for-profit streets, and I know of no for-profit libraries. The public library was not only a cheaper place to rent DVDs than Blockbuster, it had a greater variety of films available. Blockbuster and other for-profit video stores tended to remove very good films to make way got 87 copies of the latest sequel of Die Hard.
We would be better off if local municipalities took over telephone and internet service. ATT and Comcast are the usual options, and they are the most hated companies in the country in survey after survey.
I don't see any reason to do this will cell phones, but land lines are a natural monopoly and ATT has sucked in all its manifestations here: Southern Bell, Cingular, BellSouth and ATT
Taxing citizens for public schools and libraries is clearly justified. If we did not do this, we would be a country of ignorami.