The Winchester Board of Commissioners started picking through the proposed budget and analyzing numerous cuts in response to increased retirement contributions Wednesday.

City Manager Matt Belcher said general fund expenses outweigh revenue by about $2 million, though reserves, transfers and grants put the city financially in the black.

The state pension situation has put the city in a better situation than initially expected as retirement contributions will now be phased in at 12 percent annually instead a lump of $1.1 million this year, Belcher said. This year’s contribution will be about $320,000.

“There have been significant cuts made, particularly in the general fund,” Belcher said Wednesday, because of the unknowns in the pension system. “I am proud of the fact we were able to maintain, with your support, a modest pay increase for our employees.”

The proposed budget calls for a 2 percent increase for all city employees and a 3 percent increase in health insurance premuims, but many things were cut including non-mandatory travel ($100,000), a cleaning allowance for employee uniforms ($22,500) and all “as needed” items in the budget ($484,300).

It also eliminated major capital projects including construction. One of those is a storage building for Winchester Fire-EMS, which would cost approximately $280,000. Belcher deferred the project to fiscal year 2020 in the proposed budget.

“I understand where the city is … but I want to stress the point,” Winchester Fire-EMS Cathy Rigney said. “We are out of room. We have probably $1 million in equipment sitting outside.”

“We have certain things that are kept outside and are deteriorating,” said Battalion Chief Jason Keller. “We have certain things that need to be climate-controlled.”

The proposal would be to build a 50-by-80-foot building at Station 3 near the industrial park to house the equipment, which won’t fit in any of the other fire stations or storage buildings.

The city’s fire stations are a longer-range concern, as the newest of the three is now 25 years old. The other two stations were built in the early 1970s.

Space, Keller said, is at a premium throughout the aging facilities.

At City Hall, Belcher proposed contracting with an outside company for janitorial services, which would mean cutting one position. Other proposed cuts included $2,000 for secure document shredding services and Belcher’s mileage reimbursement for using his personal vehicle on city business.

The commissioners also heard presentations from Main Street Winchester, Public Works and the planning and city engineering staff Wednesday afternoon.

A second budget workshop session will be May 30 at city hall. The budget must be approved with two readings by the commission before the end of the fiscal year on June 30.