PAWTUCKET — Closing a school or fire station are possible options amid a projected city deficit of $5.5 million to $8 million, Mayor James E. Doyle said yesterday, the same day 17 employees were cut from the municipal payroll.

Ten were parks and recreation workers who prepare the recreational fields.

That brings to 40 the number of municipal employees who have lost jobs in three rounds of cuts this year, Doyle said.

He called it the worst situation “I’ve ever come across in my years in the political arena.” Doyle served 27 years on the City Council and 13 years as mayor.

With the federal economic stimulus bill headed for passage, School Committee Chairman David A. Coughlin said that he has seen projected estimates that the city could get millions of dollars in school aid under the plan in 2009, but wasn’t sure whether that would affect city finances in the current budget year, which ends June 30.

He said he has not seen final numbers or what restrictions may be placed on them.

“There’s a lot of pieces to that puzzle, and we don’t know what the pieces are yet,” Coughlin said.

Last week the School Committee rejected, in a 4-to-3 vote, pursuing a Caruolo action to sue the city for more operating money.

The committee appointed a panel to meet with the mayor, City Council and state Auditor General Ernest Almonte to look at options and will meet with its lawyer, Stephen Robinson, later this month.

The school district, which is required to notify teachers of potential layoffs for the next school year, has sent notices to 76, but that does not mean that many will lose their jobs.

mmckinne@projo.com