NEW YORK (Reuters) - The NBA's players union and owners appear no closer to resolving their wage differences before the June 30 expiry of the collective bargaining agreement after the League rejected the latest offer on Wednesday.

Players have offered to reduce wages by $500 million over a five-year period, while owners are looking for a minimum of $2-billion a year in conjunction with a flexible salary cap.

The NBA is also reportedly seeking funds that were held back in escrow from players' salaries to ensure wages did not exceed 57 percent of league revenues.

The players had expected those funds, approximately $160 million, to be dished out as last year's salaries are expected to fall below that threshold.

"That's money that players have already earned, worked for this past season," said players union president Derek Fisher.

"That's off the table, as far as we're concerned. To me it speaks to the arrogance that they feel in approaching us with their proposal, to be able to go back and reach for those dollars."

Union executive director Billy Hunter said they could not agree to the owners' proposal.

"Their demand is gargantuan," Hunter said, "and we just can't meet it."

NBA Commissioner David Stern said the league's wage reduction proposal was "modest."

The two sides are scheduled to meet on Friday.

(Reporting by Mike Mouat in Windsor, Ontario; Editing by Peter Rutherford)