In my quick read, I didn't see a way not to use the service.
"If this is your first time running pulumi new or most other pulumi commands, you will be prompted to log in to the Pulumi service. The Pulumi CLI works in tandem with the Pulumi service in order to deliver a reliable experience."[0]
I think Pulimi is similar to terraform in that you can use multiple backends for state management, of which their "service" is one[0]. Meaning you could use the CLI backed by an S3 bucket for free.
"If this is your first time running pulumi new or most other pulumi commands, you will be prompted to log in to the Pulumi service. The Pulumi CLI works in tandem with the Pulumi service in order to deliver a reliable experience."[0]
[0] https://www.pulumi.com/docs/get-started/kubernetes/create-pr...