I agree with you that states and municipalities can better monitor the needs of their people and manage to meet those needs more efficiently. But it isn't that simple, much of the state's and local responsibilities are paid with turn-back funds and community block grants that are federal moneys paid by taxpayers. So we pay our taxes to the federal government, and in turn, expect a certain amount to be returned to pay for these projects, in whole or in part. Now what I hear from ultra conservatives is that this turn-back money is welfare, and "welfare bad; make people lazy." So most plans put forth are to cut the federal moneys and let the states and municipalities raise their own in the form of taxes and surcharges. This means that the people are then being taxed more and more and are not reaping much, if any, benefits from federal income taxes they pay in, while the federal government would get to keep it all.
While you did say "federal programs that are not included in the federal budget", and under most ultra conservative proposals that means just about all programs except federal salaries, national defense, foreign aid, and never-ending pork projects like highways and dams in powerful congressional districts. And what about schools? Certain government bureaucrats are already trying to cut education money to public schools to pay it to private schools in the form of vouchers for students who don't want to attend public schools.
The only way these cuts would be fair would be to cut the portion of income taxes that pay for the social and environmental programs that are completely turned back to the states and let the states add it to their tax bills to pay for these projects. If the states can't have the block grants, then they should be able to withhold the money from the amounts paid to the feds by their citizens before it gets to D.C. The federal government does not deserve a free ride on the backs of the middle class, which is always what happens when the states have to pay for their own projects.