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On the night the Winchester Board of Commissioners approved the first reading of the new budget, city officials affirmed a plan to make other cuts to city expenses.

City Manager Matt Belcher presented a two-phase cost reduction plan that includes a hiring freeze and encourages retirement for those employees who qualify.

Belcher said he anticipates significant reductions in payroll tax revenue in the next three to six months as a result of the coronavirus pandemic.

“With the economy opening back up, those tax receipts will go up, but there will be some lag,” Belcher said Tuesday evening. “We need to tighten our belts. These are some things we need to be proactive about.”

The fiscal year 2021 budget, which was approved Tuesday on first reading, already lost employee raises and capital spending, among other things.

The plan proposed Tuesday includes:

— an immediate hiring freeze for all departments, potentially saving $532,000.

— following federal wage and hour guidelines regarding overtime, potentially saving $182,000 to $390,000.

— encouraging retirement for qualified employees, potentially saving of $848,400 to $1,048,600.

— voluntary time off without pay for employees for up to three weeks, if it doesn’t create a hardship for the department, potential savings of $350,000.

The first phase, including the four listed steps, takes effect June 7.

A second and more drastic phase would include salary cuts for the city’s top wage earners, employee furloughs and layoffs of 10 to 15 employees across the city.

“I hope phase two doesn’t come into play,” Belcher said. “We’ll continue to monitor the situation.”

The city, he said, has a $4 million cash reserve it can tap into as needed.

The budget, which was approved on first reading Tuesday, included a 25 percent cut to all city departments and a 25 percent cut in funding for outside agencies. It also included a $1 million transfer from the capital expense fund to cover shortfalls within the budget.

The budget calls for $17.3 million in revenue and $18.2 million in expenditures, along with a $2.7 million carryover from the current fiscal year and the $1 million transfer from capital expenses.

The vote was unanimous. The commission must approve a second reading of the budget by the end of the fiscal year, which is June 30.

In other action, the commissioners:

— heard a presentation from Winchester-Clark County Farmers’ Market representatives about fundraising efforts to build a new canopy.

— reappointed Paul Howard to the local codes appeals board for a three-year term.

— reappointed Leonard Shortridge to the Winchester-Clark County Board of Adjustments for a three-year term.

— authorized dental insurance renewal rates.

— appointed Sherry Hampton to the Winchester Urban Renewal and Community Development Agency board for a four-year term.

— reappointed Terry Mynk to the Winchester-Clark County Planning Commission for a four-year term.

— appointed Gary Wiseman to the Winchester-Clark County Parks and Recreation Board for a four-year term.

— appointed Wes Harris to the Winchester-Clark County Indistrial Development Authority for a four-year term.

— accepted the resignation of patient transfer specialist/EMT Caleb Shulten.

— reclassified Kelly Smith from firefighter II/paramedic to firefighter III/paramedic.

— reclassified James Griffith from firefighter II/EMT to firefighter III/EMT.

— reclassified Hunter McFarland and Matthew Bowling from firefighter I/EMT to firefighter III/EMT.