Nassau County is facing a $71.6 million deficit by year's end after a three-year employee wage freeze was lifted and sales tax revenues cratered, the county legislature's budget office reported yesterday.

The projected deficit does not include the estimated cost of $70 million in commercial tax refunds, which the county traditionally has paid by borrowing, according to a midyear report by the legislature's bipartisan Office of Budget Review.

"County finances are at a crossroad," said Budget Review director Maurice Chalmers in the 9-page report. Although County Executive Edward Mangano has taken steps to increase revenues and cut expenses, Chalmers wrote "the county has lost its financial flexibility to absorb uncertainties."

Budget Review's projected $71.6 million deficit comes after County Comptroller George Maragos predicted a $77 million year-end gap while the county's control board, the Nassau Interim Finance Authority, warned that $133 million is "at risk" in this year's budget.

NIFA in May approved new contracts for four of the county's five unions -- and is poised to approve a fifth deal for correction officers -- that ended the wage freeze in return for concessions expected to save millions of future dollars. Although Mangano moved to cover immediate costs by raising fees and installing speed cameras in school zones, the Office of Budget Review predicts salary expenses will exceed the budget by $39.3 million this year.

Meanwhile, county sales tax collections fell 9 percent for the first six months of 2014, leading Budget Review to predict a $70 million shortfall by year's end.

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Chalmers, who could not be reached Wednesday, urged county officials in his report to "implement long-term solutions that lead to a structurally balanced budget."

Tim Sullivan, Mangano's deputy county executive for finance, said yesterday, "The administration is preparing a budget for 2015 that will include corrective actions to address the sales tax shortage." Mangano must submit his proposed 2015 budget by Sept. 15.

NIFA chairman Jon Kaiman, who was at the county executive building yesterday, said via email: "Wage increases are being covered as per our agreement with the county. I have every expectation that those costs will, in fact, be met. Sales tax shortfalls must also be addressed. I've met with the county executive on this in regard to putting forward a plan to address this situation."

But Legis. Judy Jacobs (D-Woodbury), who was the legislature's presiding officer when NIFA was formed by the state in 2000 to be Nassau's fiscal watchdog, said she wants NIFA members to "remember what NIFA was actually created for. NIFA has to do its job also. We don't need a wish list and a 'maybe' list. We need positive, provable solutions."