The problem with collecting parking taxes has reared its head in Los Angeles, and politics may be the major reason.
In the Byzantine workings of a major city government, sometimes major amounts of money simply "falls through cracks," at least according to sources within the city government, speaking on the assumption of anonymity, in Los Angeles told Parking Today. There are many levels of enforcement. The city’s finance department is tasked with collecting the money.
They currently have The Parking Network, a Texas based consulting and auditing firm, performing audits on the city’s parking operators. In the past two years, TPN has discovered more than $15 million in unreported parking taxes after performing audits on between 10 and 20 firms covering several hundred locations. TPN then turns the audits over to the finance department. However it doesn’t end there. The finance department has no enforcement ability to actually collect the money. That needs to be done by the district attorney.
And according to the Finance Department, there hasn’t been a DA action against parking operators in the past five years. It should be noted, however, that most District Attorneys don’t go looking for such problems, but typically act when they are brought to them. In the past month, however, this issue has seen the light of day. The Mayor has gotten wind of the problems and has directed the city attorney to become involved and begin to collect the past due taxes, and the police commission to ensure that all lots in the city are properly licensed. This of course has been duly reported in the local newspaper, giving appropriate ink to local politicos.
Here’s the rub: The Mayor, District Attorney, and Head of the Finance Department are politicians. They love the limelight, but the big question is, at least in the minds of some at city hall, whether or not the wheels of city government will begin to move.
One issue is the "falling through the cracks" scenario. In one reported case, an audit was done of an operator five years ago. It discovered a substantial seven figures in past due taxes. After considerable negotiation and time, the city settled for less than half.. However, that amount was never collected. It was simply forgotten. Recently, after this error was discovered, the amount was renegotiated again, and a much smaller settlement was agreed. Whether or not that has been paid is unknown. Now the operator is crowing to whoever will listen that the tiger has no teeth, and if you get caught, you can just wait it out.
A more pressing problem to legitimate parking operators that pay the tax is a level playing field. The tax in the city of . If an operator bids a location and their competitor know that it is going to collect the tax but under report their income and not pay it, and never be required to do so, the competitor can underbid the first operator by 10% and get every deal.