ATWATER (CBS/AP) — A fiscal emergency has been declared in the small Central California city of Atwater, a move that could lead to the state’s fourth municipal bankruptcy this year.

KFSN-TV said leaders of the agricultural city of 28,000 approved the declaration on Wednesday night. Atwater is along State Route 99 northwest of Merced.

The foreclosure crisis and mounting employee pension costs are being blamed for the city’s $3 million debt.

Layoff notices have already been sent to dozens of city employees and service cuts are expected.

California cities must try to enter talks with creditors to avert bankruptcy filings, but a fiscal emergency declaration allows them to circumvent the law and file for bankruptcy.

The cities of San Bernardino, Stockton and Mammoth Lakes filed for bankruptcy protection earlier this year.

(Copyright 2012 by CBS San Francisco. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)



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