Fire departments and police departments began as private companies; see the history of NYC. They were nationalized to limit the massive corruption associated with private fire departments (i.e., fire departments deliberately setting fire to rivals' customers).

But to the point: a U.S. state can't nationalize a private company. It simply lacks that power. The closest it can get is buying a private company, or creating a public agency or public-private partnership, all of which California has done before.