Officials say they're also looking to eliminate 16 vacant positions to save a total of $5 million.
The city manager blames a shortage of state funding, plus significant decreases in property and sales tax revenue for the economic crisis.
About 30 Merced Police officers received the layoff notices, along with 12 firefighters and 12 members of the public works department.
Merced Police Officers Assoc. President, Det. Keith Pelowski said, "The officers are all depressed and they're pretty upset about everything. You have a lot of officers that have families, homes, and bills to pay."
The proposed cuts will go before the city council May 2nd. If they're approved the layoffs will take effect at the end of June.