Why? Because these governmental entities have too much of their money in US Treasury securities.
Now let me get this straight: These cities and counties are being penalized for investing in the safest securities in the nation. So if they had invested in riskier bonds, debentures, stocks, etc., that would have been better?
Does that make sense to anyone? Except S&P, of course.
(Remember that after S&P downgraded the US, nervous investors fled the markets for...U.S. Treasuries. And we trust these people to provide guidance to investors?)