San Francisco Controller Ben Rosenfield proposed legislation Monday that would require the city to maintain a minimum general-fund balance and to create a new budget-stabilization reserve that would augment the city’s rainy-day fund.

Fitch Ratings lowered its outlook on the city’s AA-minus general obligation bonds to negative from stable last month, citing low reserves. The city closed a general fund deficit of $438 million, or 18% of expenditures, this fiscal year with one-time solutions, including spending reserves. The city had $123 million of reserves at the beginning of this year and expects to draw that down to $50 million by year end. Its deficit is expected to grow to $522 million in fiscal 2011.

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