They still have to compete on everything from providing good enough facilities to paying professors enough to keep or acquire them. If you inflate half the market when it comes to salaries, the other half either has to compete or will lose all of its talent.
If X type of lab becomes standard at non-state schools, then all the state schools must build one too or suffer.
If X type of lab becomes standard at non-state schools, then all the state schools must build one too or suffer.