I have been toying with the idea of how would the town governments be able to run if they had to operate on user fees alone. This would automatically put in an incentive for private contractors to supply the services that we have been convinced only a government can do. (I have a friend in NH that pays over 15K every year in property taxes alone)
The big cost is the government indoctrination centers AKA public schools. If the schools were required to operate under a tuition system they would close down because existing (non union) private schools would be far more efficient.
Private trash haulers could directly compete with the (union) sanitation departments
Road maintenance could contract to private contractors
Fire and Police are more difficult to privatize or operate under a fee system but I'm sure there can be a way to offer contracts for either town or neighborhood coverage.
It'll probably never happen but it is an interesting exercise.
It's a great exercise, and one I do myself from time to time. I think government does have a role to play in terms of delivering services, but mainly as a general contractor, of sorts, that farms out those services to specific contractors, like you describe. Hell, at one point in our nation's history, even firefighting was done by a private concern. It strikes me that there are few services government should provided directly.
all I know is here in MN, property taxes go up, while generally, test scores go down.