Brookhaven could burn through its $49 million surplus in two years unless it curtails spending and eliminates some jobs, town Supervisor Mark Lesko warned the town board Thursday.

He recommended saving money by consolidating departments, reducing capital project budgets, freezing hiring, and privatizing or cutting some services. He also said expanding the landfill would raise an additional $2 million a year if the state Department of Environmental Conservation approves the expansion.

The town is in financial trouble because of the skyrocketing costs of benefits and declining revenue from franchise fees and mortgage taxes. The projected mortgage tax revenue is $8.9 million this year, compared with $34.92 million collected in 2005.

"It's staggering," Lesko said of the mortgage tax drop-off. "It's just absolutely mind-blowing, the loss of revenue in a municipality of this size."

Because of the decline in revenue and increased costs, Brookhaven used $7.78 million of its surplus to balance the budget last year and expects to use $14.6 million this year to make its $260 million budget. But Lesko said the surplus should not be used for budget balancing.

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"Are you asking us to cut?" Councilman Timothy Mazzei asked Lesko during the work session. "Yes," Lesko said, and laid out a number of recommendations.

He suggested combining the highway and other departments into a new Department of Public Works, eliminating some managerial positions and laying off some "duplicate" positions to save more than $1 million.

A call to the Brookhaven white-collar workers union was not returned Thursday.

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If the board agrees, there will be a referendum in November to vote on forming the new department.

"These are tough cuts," Lesko said to the board. "You're going to look at them and say, 'No.' "