The evisceration of mandatory mental illness treatment programs and powers was primarily driven by psychiatrists' promises and civil rights advocates' demands. Legislators keen on budget reduction were simply happy to oblige, and Reagan didn't standout in that regard. He just happened to have a higher profile due to his being governor of California and then president. All other states made the same mistake as California, did so at around the same time, and it all unraveled long before Reagan became president.
Here's a more contemporaneous 1984 NY Times investigative article detailing the history: "How Release of Mental Patients Began", https://www.nytimes.com/1984/10/30/science/how-release-of-me...
EDIT: The report mentioned in the article is presumably, "The Homeless Mentally Ill: A Task Force Report of the American Psychiatric Association", https://doi.org/10.1176/ps.36.7.782 I can't find a freely available copy online, however.