More than costs for bureaucracy, is the availability of transportation. Prior to ~1910 most of the US had a small market every 3-10 miles with ~6 miles being quite common. The smallest dried up and blew away before 1930. With those large enough to have broader services lasting into the 1970s. It is the availability of personal travel that killed the small towns.
That certainly started the trend; the loss of urban jobs killed suburbs as well. Why live close to our unassimilated permanent underclass when more and more people commute from one suburb to another? In my area, office parks have sprung up in suburbs that have made the concept of a city obsolete; as a result, the encircling towns serve no other purpose than housing the imported Hispanics and Asians.