David Leonhardt floats an idea in his New York Times column today:
Imagine if Washington offered to help states get through today’s shortfalls in exchange for making progress on their long-run problems. In the ideal version of this program, states would get some initial money without strings attached. They need it to avoid those teacher and firefighter layoffs. States that came up with credible plans to reduce their deficits would then get more money over the next few years.
You can't tell from the quote, but by "reduce their deficits" he means reduce employee pension and health care costs, which are the main reasons for the deficits. Of course, coming up with a "credible plan" to do this is a bit easier said than done. But the federal government incentivizing it won't hurt, and hey, if some jobs can be saved in the process, that's all to the good, right?