The post office has been around for a very long time, and is an example of the government providing a service which people pay for by using the service.

There are numerous examples of this. Your water supply might be one of them.

Municipal broadband is also usually pay-for-use, and you could fund it with bonds, which is also common.

You could argue against how a municipality decides to implement their own broadband service. But saying that no municipality should be able to provide any service - or even particular services - seems a bit odd. Since that's the majority of what local governments do...

The police, education, water, roads, parks, etc...