I'm an undergraduate at a UC school right now, and I can tell you that that
is happening in the UC system. State funding per student has collapsed [1] and campuses are scrambling to cover the costs. One way to do that is by increasing tuition, and another is by admitting out-of-state students who pay massive premiums to attend the university.
Out of state students pay about $50k/yr to attend a UC. In-state students pay about $12K, and the UC spends a bit over $30k per student. That means that each out-of-state student provides enough revenue to pay for an additional in-state student!
Absent additional state funding (lol), an enrollment cap would necessarily result in tuition increases. I really really hope it doesn't get passed.
[1] http://www.ppic.org/main/publication_quick.asp?i=1119