A state oversight board Thursday backed away from seizing control of Nassau County's finances, giving County Executive Edward Mangano until Jan. 20 to explain changes he has made to balance next year's $2.6-billion budget.

Although the Nassau Interim Finance Authority had appeared to be marching quickly toward takeover, members of the state-appointed board said they agreed to allow Mangano more time in light of a letter he sent to them Wednesday and after his in-person plea Thursday morning that his budget is sound.

"NIFA has decided to give the county, in an abundance of caution, one final opportunity," chairman Ronald Stack announced after board members met behind closed doors for three hours Thursday. He said they want detailed backup information showing that the spending cuts Mangano talks about in his letter are real and that contingency funds listed as ways to fill potential gaps are actually available.

"NIFA is extremely concerned that the 2011 budget is not balanced and a 1 percent deficit is a real threat," Stack said.

Created to deal with Nassau's fiscal crisis of a decade ago, NIFA is required under state statute to take control of the county's finances if it determines that Nassau has a 1 percent budget deficit - $26 million in this case - or is likely to run such a deficit. Under a control period, NIFA can freeze union salaries.

NIFA staff identified $244 million at risk when Mangano proposed his budget in September, including $60 million in union concessions that have yet to be obtained. Moody's Investors Service subsequently identified $158 million that may not materialize. Stack Thursday declined to identify or quantify the budget items now considered questionable.

Mangano insists that changes he and the Republican-led legislature made to the budget in the past few weeks eliminated any potential deficit and said he is continuing to negotiate with the unions.

advertisement | advertise on newsday

Although Mangano originally did not plan to attend the public NIFA session, the county executive made a surprise appearance, accompanied by most of his executive staff. Sources say union leaders and Nassau Republican chairman Joseph Mondello had urged Mangano to make a personal plea to the agency, rather than appear to be snubbing a group that could decide the fate of his year-old administration.

After NIFA issued the new Jan. 20 deadline, Mangano said in a statement, "I will continue to cooperate with NIFA by providing them the information needed to verify the budget is balanced for next year."

In issuing the Jan. 20 ultimatum, NIFA members all expressed doubts about Nassau's budget and Mangano's handling of it.

"We cannot overemphasize that we remain concerned," said member Robert Wild. "I personally find it disturbing that this information comes at the very last minute."

Member George Marlin talked about "the tale of two deficits." Besides budgetary, he said, "there is the credibility deficit. A lack of candor from the county executive. Promises made, not kept."

A member said later that Jan. 20 is "a real and final deadline. Real and final deadlines have consequences."

Stack added that neither the outgoing or incoming governors had attempted to influence their decision. "This is a very independent board. They're not going to take orders from anyone or direction from anyone," Stack said.

Jessica Bassett, a spokeswoman for Gov. David A. Paterson, said he "did not speak to anyone on the NIFA board ." A spokesman for Governor-elect Andrew Cuomo said Cuomo has never spoken to anyone on the NIFA board.

With James T. Madore