Local governments don’t generally run deficits (in the US). And there definitely is a price signaling mechanism. If trash becomes more expensive to dispose of, that cost is passed on to consumers via higher taxes.

> There is no signaling mechanism to indicate their cost to the consumer.

Where is this true? In every jurisdiction I've ever lived in trash service has been private and I've had to pay for it myself. The service fee is based on volume of trash container. I've always had direct feedback on trash disposal costs.