The U.S. credit rating issue aside, fiscal pressures on state and local governments continue. Last month, Moody's issued a report noting that downgrades of U.S. public finance credits outnumbered upgrades for the 10th consecutive quarter. In a move that foreshadowed S&P's reasoning for downgrading the U.S., Moody's and Fitch put Minnesota's credit rating on negative watch, citing "political intractability" as one of the reasons for the action. The factors complicating state and local ratings are deepening. To get a sense of the rating challenges states and localities face, I talked to Robert Kurtter, managing director for Moody's U.S. State and Regional Ratings. Here are some of the key points he made: The dangers of a U.S. credit rating downgrade. There is a relationship between the U.S. sovereign debt rating and state and local governments.