The city's budget director resigned after a report accused him of showing favoritism toward a company seeking a $150 million contract to collect parking fines.

Mayor David Dinkins announced Philip Michael's resignation Thursday, a day after the release of a Department of Investigation report that's bound to figure in the fall mayoral campaign.The report released Wednesday accused Michael and other top aides of behaving improperly in their negotiations with Lockheed Information Management Services.

Michael was not accused of breaking the law.

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On Wednesday, Michael said his main concern in pushing a Lockheed contract was its promise to increase collections of unpaid parking tickets by $100 million a year.

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