My guess is that it has to do with the poor state of democracy in the United States. Local elections are dominated by moneyed special interest groups, many people don't vote in them, and those that do, often vote down the party line.
Result: It's difficult to run government services well, when we do such a poor job of picking good people to run the government.
I agree with your conclusion, but I'm not so confident "moneyed" special interest groups are the issue. I could speculate it has more to do with voter interest priorities in general.
Take California DMV for example. The DMV is led by state governor appointees. No governor will be voted in or out office based on DMV improvement performance. Running government services well hardly ranks in voters minds
Result: It's difficult to run government services well, when we do such a poor job of picking good people to run the government.