Big cities frequently complain that they are "owed" million for unpaid parking tickets. They turn to outside collections firm to go after individuals accused of not paying citations that may be a decade or more old. Oakland, California found itself in the opposite position last week as the city auditor determined the city itself owed money to drivers who overpaid their tickets.

Parking citations are a big business. As cities like Oakland face larger budget deficits, city leaders turn to parking tickets for revenue. Oakland generates $23 million in profit from 387,000 tickets a year. A report released last week by City Auditor Courtney A. Ruby found that some of this money has been illegally collected.

"The city has previously failed to notify citizens when they overpay parking tickets and is currently holding $316,000 in overpayments related to FY 2010-11 alone," Ruby wrote. "California state law requires that citizens' overpayments are held for a period of three years and citizens must be notified before the city can use these funds. Our audit found no evidence that, prior to FY 2010-11, citizens were notified of parking ticket overpayments, as required by the California Government Code."

The overpayments are not necessarily the fault of a motorist. Often, the city places a lien on a vehicle registration or intercepts an income tax refund. If the original ticket is paid before the refund is seized, the result is a double payment. Other motorists might pay a ticket, then receive an overdue notice threatening legal action and pay again.

In 2010, Oakland outsourced parking tickets to ACS State and Local Solutions (ACS is now Xerox). The contract with Oakland required ACS to meet a ticket collection quota of 80 percent, up from 68 percent.

"Had ACS met its collection target as promised, the city would have received additional ticket revenue ranging between $401,000 and $620,500 in FY 2010-11," Ruby wrote. "However, under the contract, ACS appropriately paid the city $10,128 in total penalty fees for missing its collection targets."

City officials denounced the audit findings, insisting that a new parking ticket system is in place and the problem has been solved.

"It should also be noted that the auditor's claim that the city was unaware of overpayments is simply untrue," said a statement from the city administrator. "Staff was aware of the overpayments; however, the previous payment process system was not capable of tracking and identifying overpayments."

A copy of the audit report is available in a 1.5mb PDF file at the source link below.