[mjn]

That may be true at some universities, but certainly not all.

I'm most familiar with the University of California, where the state's willingness to fund it has massively decreased, not only as a percentage subsidy but in terms of actual contribution. In 1975, the state contributed $29k towards each UC student; in 1985 it was $31k; in 1995 it was $23k; in 2005 it was $20k; and today it's a mere $13k (all figures in 2012 dollars). That's a decrease of about 55% in per-student funding: http://www.kmjn.org/misc/uc_funding.txt

Overall cost of the UC system, on the other hand, has actually slightly decreased on a per-student basis, but not nearly enough to cover that 55% funding cut. Therefore, tuition has gone up to cover it.

If you want to factor out the confounding factor that a larger percentage of students go to college, you can also look at it on the macro-level and ask, what percentage of the state's resources do Californians choose to devote to funding higher education? That gives an indication of higher education as a public priority. And there it's again a drop of a little over half: in 1975 the UC system's funding equalled 0.3% of state GDP; today it equals 0.12% of state GDP. If funding were put back to 0.3% of state GDP (or even 0.25% or so), tuition could be cut almost to zero, so there is no real cost problem, just a no-longer-willing-to-fund problem.