On state and local deficits

What if the Democrats wanted to make states more efficient, leaner and really wanted to cut waste. What if Republicans really wanted to create jobs and not make the economy worse so that unemployment would go down and it would not help them in the next election. Then, perhaps, they would agree to have the federal government loan some real money to the states to tide them over this continuing high unemployment, avoid layoffs and allow states a bit of a breather. What if the federal government were to be a lender to the states at a minimal interest rate and take back the states promissory note. No increase in the deficit. What if the state did not need to repay the money until unemployment fell below some reasonable number, perhaps 5 percent or 4 percent. That would allow the state to have income from sales and income taxes from those people who had jobs, would be able to repay the loan easily and would not have to repay it until then. What if there were an incentive to make state government more efficient as the stick with the carrot to make the Republicans happier. Would all that work?