I'd suggest it's not typically thought of as including local government. It is a peculiarly overloaded term though, particularly if you live in a country where

I'd suggest it's not typically thought of as including local government. It is a peculiarly overloaded term though, particularly if you live in a country where "state" is a key governmental/administrative division! In the usage here - "nanny state" - I'd agree it can include local government and indeed even organisations operating below that level (it might just be a single school board making "nanny state" decisions).