The fair averages about $80,000 in annual operating cost, with significant slices of its pie going to pay premiums to winners and its insurance company.
Eckstine said the state allocation is the fair's largest source of revenue in its budget.
With proposed state budgets cutting or eliminating funding for county fairs and agricultural programs like 4-H, he said his board had to make cuts in its own ledger and, this year, it chose to cut prizes.
Only events that have been sponsored by individuals, businesses or organizations will be able to award premiums to winners, he said.
The highest premium or prize up for grabs at the fair is awarded to the best apple pie, according to the 2009 Fair Book, which lists the first-prize purse at $160.
While the owner of the winning summer butternut squash would normally walk away with just a few dollars, that event and many others will not be paying premiums, Eckstine said.
Most of the major events, like the apple pie contest, the dairy cow competition and the tractor pull, have sponsors.
Yet with the fair unable to pay premiums for many events, Eckstine said fewer people have entered the 103rd fair.
"We have seen a definite decline in entries," he said. "I asked people to come and compete for pride, but when you have worked all year on a quilt, that is easier said than done."
Not only is the budget crisis having an impact on the fair's ability to operate, the economy has stifled crowds at the fair.
Reduced admission incentives have not drawn the crowds that used to define the fair, Eckstine said.
Still, he said he is remaining positive, especially for 2010.
"I have a great passion for agriculture and a great passion for happy children," he said. "It is very rewarding to see the happiness on the face of a child as he or she walks through the dairy barns and meets the cows."
Nothing has been decided about the 104th fair, but Eckstine said he hopes it can rebound from the financial struggles of 2009.
If you go ..
WHAT: Franklin County Fair
WHEN: Through Saturday
WHERE: Chambersburg (Pa.) Rod & Gun Club, 3725 Warm Spring Road, eight miles southwest of Chambersburg
COST: Admission varies; $3 to $8 depending on age and day. Carnival rides Monday through Saturday, extra charge.
MORE: Call 717-369-4100 during fair week or go to www.franklincountyfair.org