[Politics] Does the Federal Governments ability and practice of giving money to States inhibit the States sovereignty?

Since everyone is in a political mood today, this question popped into my mind while sitting through a State committee hearing yesterday. So, what happens is the Fed gives the State money, but often in exchange for the State adjusting the laws to fit the criteria that the Federal government wants. For example, about 8 years or so ago the Fed forced all the states to lower its BAC level for Drunk driving down to .08 many states had it at .10. If they didn’t they would lose billions in funding for road services and repair.
Does this undermind the original intent of the founding fathers?
Does this undermind our democracy?
If no why, If yes, why and how might we correct this problem.
Or do you think a strong federal government is good?