State mental health institutions weren't closed because of budget reasons. At least that wasn't the primary reason. Starting about 50 years or so ago there were several court actions, many by the ACLU, to force the states to close their inpatient mental health facilities (state hospitals) because of the conditions, lack of treatment, allegations of cruelty, and so on. The problem is that the proposed solution, community based mental health services, never developed to take their place. At to that court decisions and legislation that required care to take place in "the least restrictive setting" possible and the impossibility of compelling people to take their medications, and we have the current disaster that is mental health care in this country.
Whenever this topic comes up, I recommend reading Clayton Cramers Blog and his book "My Brother Ron". It gives a detailed history of mental health care from colonial times up until this century.
In other news, I saw an interview on CNN with a "former CIA counter terrorism expert" who said that the solution is to move the TSA check points out to the curb. He apparently mistakes the TSA mission of clearing passengers to fly, with fighting attacks by terrorists. Talk about mission creep. He was trying to equate this attack with a terrorist mission to breach the security of the airport and get to a plane. I hope that no on in a position of authority pays attention to him.