City of Los Angeles Controller Wendy Greuel today revealed that the Office of Finance could not demonstrate that it has an accurate inventory of parking lots, creating uncertainty about whether the city is retrieving all of the Parking Occupancy Tax it is owed.
“One of my greatest concerns for the city is the uncollected debt owed to the city, including parking lot operators who owe millions of dollars,” said Ms. Greuel,a candidate to succeed Antonio Villaraigosa as mayor next year.
“The city needs to have processes in place to ensure, with a high degree of certainty, that uncollected money isn’t being left on the table at a time when the city needs it most.”
As of August 2011, the Office of Finance’s tax database system had 1,900 registered parking lots in the city.
However, that figure could not be verified and may not represent all of the parking lots subject to collecting the tax.
Ms. Greuel’s auditors determined that the inventory was unreliable because neither the Office of Finance nor the contractor charged with identifying unregistered parking lots has conducted a citywide survey to identify all commercial lots.
In response, the Office of Finance compared the state’s Franchise Tax Board records to its own and found 68 parking-related Franchise Tax Board records within the city’s taxable radius. Comparing this information to its own database, the Office of Finance discovered four parking lots not registered within the city’s records system.
Additional factors impacting the accuracy of parking lots records may be attributed to the fact that parking lots can have multiple addresses.
This contributes to inaccuracy and confusion in the records system. Parking lots may register different addresses in different years for the same lot. This is compounded by the fact that the Office of Finance has insufficient resources..
A mere two to four contractors are assigned to observe parking lot activities for the entire city. By contrast, the City of Chicago has six full-time auditors working on parking collections, and San Francisco has several employees performing oversight activities on a near-fulltime basis.
“Unfortunately, our car culture is not going away any time soon,” said Ms. Greuel. “The Parking Occupancy Tax is a vital source of revenue, worth about $85 million annually.
“I urge the Office of Finance to heed my recommendations and immediately put controls in place to ensure that all of the parking lots are accounted for and all the parking taxes are being collected and deposited directly into the city’s bank accounts.”
Ms. Greuel’s report reveals that without a complete inventory, there is no assurance that the Office of Finance is effectively using its resources to maximize revenues owed to the city.
Her audit recommends creating a formal audit plan for all parking occupancy tax audits and instituting a system that can register all possible addresses for a single lot.
It also recommends that the city investigate the feasibility of implementing practices used by other cities to insure the maximum amount of the parking occupancy tax can be efficiently collected.
The controller has conducted more than 60 audits and uncovered more than $130 million that the city has lost to waste, fraud, and abuse over the last three years.
For more information, see http://controller.lacity.org/index.htm
