Atwater, Calif., declared a fiscal emergency and told almost a quarter of its city employees they will lose their jobs as it seeks to avoid becoming the state's fourth city to seek bankruptcy protection.

The town of 28,000, situated among Merced County's dairies and almond groves about 100 miles (160 kilometers) southeast of San Francisco, has a $3.3 million deficit that may leave it insolvent before year-end, according to budget documents. Atwater officials said they will seek concessions from public- employee unions and try to raise fees for some services and sell others to balance the budget and avoid bankruptcy.

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