Is that not the whole point? "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."
So the federal government is essentially taxing the state's citizens, then giving some amount of it back to the states in exchange for rowing the boat in the right direction. States that increase their own taxes to compensate for refusal of federal funds would become noncompetitive to other states who don't.
The framers were well before the Industrial Revolution; if they intended a right-libertarian bias, the economy they wanted unchecked was a smaller and tamer beast than this one. But anyway, they did give us the Commerce Clause.
They were well before radio, TV, internet, trains, automobiles, airplanes, nuclear power, and many other things that do not strictly respect state lines. "Leave most decisions to the states" made a lot of sense in 1789 but we live in a different world now.