First of all, the reviewers and editors of journals often work as volunteers -- so the notion of cost here is somewhat dubious.
That being said, I see no problem with asking universities to facilitate the review and editing process, using money given by the government for that purpose, and to host publicly accessible archives of academic publications for the benefit of society. We should remove academic publishers from the picture entirely, because they contribute nothing to society anymore. Universities already use tax dollars (grant money) to pay academic publishers for journal access; why don't we cut out the middle man?