After 14 straight quarters of revenue growth, most U.S. states are heading into the new year with a stable outlook even as local governments will continue to feel the financial pressures they experienced over the course of the economic downturn, according to Fitch Ratings.

Many states' reserves were replenished in a strong fiscal 2013 as taxpayers sought to avoid federal tax hikes, the agency said.

For local governments, the rating agency forecasts that slow revenue growth and increased spending will result in more downgrades than upgrades in 2014. The agency also cited some municipal bankruptcy cases as potentially being precedent setting.

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