I don't know if that's true, especially when those "local governments" are cities with millions of people. You can get permission to operate in a small city, but if you can't drive outside of it, that really limits the usefulness. Small cities aren't a focal point of taxi services either.

Waymo didn't even bother dealing with any of the small cities in the San Francisco Bay Area, they worked directly with the state of California in order to expand their service area.