Here in NJ, I live in a small town of around 7,000 or so. We have a Township Committee form of government, five committee people with one nominally as Mayor (but really the same as everyone else). They get a yearly stipend of around $5,000 a year or a little less.

It sounds crazy but our whole muni budget is under $5 million. We have almost no infrastructure other than roads (98% of housing is on well water and septic systems, there are no street lights or sewers or the like).

A lot of municipal government in the US is like this. Very small with near-volunteers running everything.

You are right that this rules out a lot of people who can't afford to effectively volunteer for local government. I think mostly this is a good thing.