The Transport Ministry has reminded councils they have to pay the Crown a proportion of what they get from vehicle infringement tickets.
It says the rule is part of the Transport Act 1962 and that the proportion - 50% - was set by the Finance Minister in 1989.
The money is supposed to be paid to the police but it has emerged that many councils, including the Dunedin City Council, have not been paying.
Council development services manager Kevin Thompson confirmed the details and said the council did not agree with the ministry's advice.
Its position was backed by a legal opinion that mirrored those received after similar reminders in 1988 and 1997, Mr Thompson said.
The ministry's letter to the council did not say what period was missed, when the money was due or how much was owed.
The amount could be significant: between January 1 and Monday, the council issued more than 4800 tickets - worth more than $970,000 - for unregistered and unwarranted vehicles.
The Parking Association, which represents parking enforcement agencies, said councils should not pay until it discussed the situation with the ministry.
Association vice-chairman Colin Waite yesterday warned he would ask officials to look at infringement fees if councils lost half to Wellington.
"This is a significant issue, and we would want to look at a programme to have the requirement changed or nullified altogether," Mr Waite said.
"But we would also have to look at an increase of infringement fees. They've not changed since 1999, but collection costs have."
Mr Waite understood the Dunedin City Council was given an exemption from paying in the late 1980s, but Mr Thompson was unable to confirm this yesterday.
A ministry spokesman wanted to see more information: the Transport Act does not provide exemptions but the Finance Minister can change the proportion paid by councils.
It was the ministry's position that non-parking, stationary vehicle offences could be easily and adequately enforced by parking wardens as they carried out their other duties.
The revenue councils could keep recognised the work, the spokesman said.
Police also issued the notices, but making them the sole issuers would be an unnecessary drain on their resources.
The ministry was unable to say how much was owed by Dunedin or any other New Zealand councils, because enforcement varied between councils.
It was working to clarify their responsibilities for paying revenue to the Crown and whether there was revenue outstanding, the spokesman said.
Transport Minister Stephen Joyce was reported last week as saying "missed revenue" became a problem under the last government.
