DMV reckoning: Senate approves $13 million for license centers

ST. PAUL -- More than a year and a half after the botched launch of a state computer system for vehicle tabs and titles, state lawmakers took another step toward making amends to some of those affected.

On Thursday, March 21, the Minnesota Senate overwhelmingly approved a $13 million package of funds to reimburse license centers for lost revenue resulting from MNLARS, a computer system launched in the summer of 2017.

The system failed in many ways, resulting in long lines for customers and an exploded business model for deputy registrars, who work at license centers. Some license centers are government-owned, while others are private businesses.

Either way, under state law, they only get revenue for each transaction they process. MNLARS was such a mess that the rate of transaction processing ground to a crawl for months, and even after a wave of initial crashes subsided, it became clear that MNLARS would require deputy registrars to do more work to process fewer transactions.

License centers often hired additional workers and paid overtime. Soon, many began complaining they were losing money hand over fist.

Dipping into retirement savings

Quick-Serv License Center, a family-owned business that operates out of South St. Paul City Hall, is one of about 72 privately owned license centers in the state.

Since MNLARS was rolled out, Quick-Serv’s transactions have been cut in half, resulting in nearly $1 million in lost sales, said Kristy Beaucage, whose parents, Vint and Janet Lewis, own the business.

“My parents, to be able to make payroll and our bills for a year and a half, used $100,000 from their retirement savings,” she said. “We have lost so much business that we couldn’t sell it for what it used to be worth, even if we wanted to.”

Lawmakers have heard stories like that for more than a year, but no deputy registrars have been reimbursed, despite almost no vocal opposition.

Last year, the Republican-controlled Legislature passed a bill that included such funds, but also a set of state IT reforms that then-Gov. Mark Dayton, a Democrat, objected to. He vetoed it. Funds also were included in a massive bill that Dayton vetoed as well, for unrelated reasons.

In other words, the license centers have become legislative roadkill, their pleas enjoying widespread support but becoming tied up in unrelated partisan politics.

Lawmakers from both the DFL-controlled House and the Republican-controlled Senate have met with new Gov. Tim Walz, a Democrat, to discuss the matter. There appears to be a general agreement that funding is warranted. However, as the legislative session continues, some veterans have begun to worry that the license center funds could again become tied up in larger legislative disagreements.

Will it be enough?

The $13 million would be available to license centers if they apply for it before June 30. Ten percent of the funds would be distributed equally to all license centers, while the rest would be distributed based on how many transactions they’ve completed.

A number of deputy registrars have complained that funds like this are only a stopgap, and what’s needed is a change to the basic funding formula. Because MNLARS requires more work for the deputy registrars, they simply can’t survive with the per-transaction fee they currently receive. There have been several proposals to that effect over the past two years, but their prospects remain unclear.

The bill approved by the Senate Thursday — which now heads toward the House — creates funds available only to deputy registrars. Representative of other categories of businesses, including car dealers, vehicle auction companies, and title insurance businesses, have said they’ve also lost money as a result of MNLARS’ shortcomings. Several influential lawmakers have talked of creating funds for those businesses, but no bills have been introduced.

Lastly, it appears that some regular Minnesotans have been overcharged for their fees from MNLARS, while others have been undercharged, according to an inquiry by the nonpartisan Office of Legislative Auditor. It’s unclear how state leaders will attempt to remedy this — if at all.