Many states have populations smaller than a single medium-sized city, so that shouldn't be that surprising.
North Carolina's annual budget for providing all of those services is $23 billion - only twice the budget of the IRS.
NCDOR—the North Carolina analog of the IRS—has an annual budget of $177 million, compared to NCs total annual budget of $23 billion, or about 1/130 of the budget of the government it gathers revenue for.
IRS budget is $11.5 billion, compared to the US annual budget of $3.3 trillion. The IRS costs 1/286 of the budget of the government it gathers revenue for.
If you are going to try to say that NC makes the IRS look too expensive for what it does, you are going to need to do more than just point at the size of the state budget to make your argument.