In hind sight, and that's where we're all operating from, I hope I would have also pulled the application. No need to put myself or the scouts in front of a politician with an agenda to take a beating about something I have no control over. And worse, on a public street where some member of the public could berate them after the city council member was a jerk.
I suppose the "correct" answer, as Pack suggested, would have been to perform the clean up anyway, trustworthy and brave.
However, I think my next step would have been to attend the next city council meeting and let them know that in the future my unit would no longer participate as their clean crew as we decided to pursue other service opportunities. Then I'd put the committee to work planning a fundraiser for the next year the weekend before the city celebration !