But this is, er, fantasy, isn't it?
Yes, but it's a grubby fantasy. All the best fantasies are grubby. Still, what about the clerics, though, I hear you ask. They can cast create water! True. They can also purify it -- but not many priests consider the maintenance of a supply of clean water for the city as top priority. Sure, clerics with the Water domain might see it as important and keep their own wells full, but unless they have a lot of those spells to spare, chances are that water's going available for sacramental and ceremonial use only. Even purify food and drink only affects one cubic foot per level.
On top of that, there's only so much a fully organised clerical force can do, even if they make a show of religious unity and all the rival churches club together. Their ethics differ too; some might try to treat the masses, others might deem the best course of action to be whatever benefits the city, and thus concentrate their efforts on rulers, scholars, that sort of thing.
Still, if you insist on using the old 'this is fantasy, I don't want everyone to drop dead of cholera!' argument, you could always say the clerics help to contain the problem, there's a series of strict laws concerning the disposal of waste, and the alchemists help to deal with anything else. It's creative, it's feasible... but it does mean you're a wimp. You don't want your characters to die of explosive diarrhoea... huh! In my day, characters shat themselves to death on a daily basis. You kids don't know you're born...