The Pew Charitable Trusts

States that are mulling deep cuts in spending also must contend with the reality that they could lose millions of dollars in matching federal money.

New Jersey Governor Chris Christie, for example, has made headlines by proposing a budget that relies almost exclusively on cuts. "I was not sent here to approve tax increases; I was sent here to veto them," Christie, a Republican, told the majority Democratic legislature last month. "And mark my words, if a tax increase is sent to my desk, I will veto it."

But as The Star-Ledger of Newark notes , New Jersey stands to lose tens millions of dollars in matching grants from the federal government if Christie's budget plan becomes law.

The state Department of Homeland Security and Preparedness would lose $5.5 million in state money in the fiscal year that begins in July, but the total could be at least twice that when federal matching funds are counted. A statewide after-school program would lose all of its state funding — more than half its overall budget- under Christie's proposal. The program's head told The Star-Ledger that the loss of state money likely would make it ineligible for up to $5 million in federal grants.

In neighboring New York, where a top budget official warned on Friday (April 9) that the state would empty its rainy-day fund and be $1 billion in the red by June, Governor David Paterson has drawn a warning from the federal National Parks Service over Paterson's plan to save $6.3 million by closing 41 parks and 14 historic sites in the state. Dennis Reidenbach, the regional director of the parks service, told Paterson in a letter last month that the governor's plans could result in the loss of billions of federal dollars for the state.

According to Reidenbach, the closure of the parks and historic sites would put New York in "noncompliance" with the rules of a federal program that is scheduled to pay the state $1.9 million this year, The Times-Union of Albany reported. But Reidenbach also suggested the state could take a much larger hit by being "debarred" from other federal funding streams, including those for transportation and education programs.