It is always nuanced of course. The inability to lock people up in California as a result of the patients rights act[1] had its effects, but a general backing off of mental institutions from both the Federal and State governments was a big problem. The 55% number in [1] matches up with my experience with homeless in the Bay Area. The tricky bit is that survivor bias is an issue as well as mentally ill people are less likely to 'blend in' and keep a low profile so in street encounters it can seem like a higher percentage than it is. Similarly in food kitchen lines the mentally ill are at a disadvantage if they lack planning skills to get into the line.

[1] 2015 In the San Francisco Homeless Count, 55 percent of people experiencing chronic homelessness report they have emotional or psychiatric conditions. -- https://www.kqed.org/news/11209729/did-the-emptying-of-menta...