Move over, MNLARS. But cleanup awaits

While the state seeks a new software program to replace the broken Minnesota License and Registration System, workers who handle drivers’ requests are waiting to find out how much the state will give them as an apology for the botched rollout.

Over the next two years, the state will spend $56 million on a new vehicle title and registration system, called “VTRS” in the recently passed state budget.  By July 1, the state must choose a company to build the new system.

Then, the state has to distribute $13 million in reimbursements to license bureaus, which handle registration tab and title transfer requests and were hammered by extra costs because of MNLARS. That process hit a snag this month.

“These losses won’t stop,” said Kristy Beaucage, general manager at Quick-Serv License Center in South St. Paul. “We’re not gaining more money, we’re still losing money, it still takes longer, (MNLARS) still doesn’t have the capabilities it’s supposed to.”

Deputy registrars who handle drivers’ requests will have to make do with the broken system for two more years while the new software is developed. They have developed workarounds for MNLARS’ inefficiencies, though drivers faced huge service delays when the system rolled out in 2017.

Cities and counties run some license centers, while private operators own 71 others across the state. The reimbursements will cover a percentage of the lost transaction fees and staffing overtime incurred because of MNLARS.

Minnesota provided reimbursement estimates to license centers earlier this month, but they were inaccurate, both public and private operators told FOX 9. Beaucage said she expected to get a new estimate Wednesday of how much she would receive, and said it would be less than 30 percent of what MNLARS cost her business.

Hennepin County officials, who run their own license centers, estimated they would get $667,230 from the state – about 5 percent of the total reimbursement pool. But Carolyn Marinan, a spokeswoman for the county, said the final number may be different.

FOX 9 requested a list of reimbursement amounts from the state Department of Public Safety. An agency spokesman had not provided the information by 5 p.m. Wednesday.

Deputy registrars may have another unpleasant surprise when they get their reimbursement checks: taxes. A state Department of Revenue spokesman said it was “hard to know” whether the payments would be taxable for individual registrars, but “generally, income from all sources is taxable at the federal and state level unless a specific exemption is available,” said Ryan Brown, the spokesman.

“There was no tax exemption language included in the law providing the appropriation to the deputy registrars,” he said.

The payments must be distributed in July, and the tax issue has created a new issue of uncertainty.

“It doesn’t make us whole. It doesn’t cover all of our losses that we have had as a business. However, we really don’t want it to be cut into again (with taxes),” said Beaucage, who said her parents – the license center’s owners – had sunk $130,000 of their own money into the business because of MNLARS’ costs.

Meanwhile, the state on Tuesday closed its request for proposals to build the replacement software system. A panel of advisors must choose the winning bidder by July 1, as required by state law.

“Under the law, the review, selection and negotiation process is private,” said Bruce Gordon, the Department of Public Safety spokesman, in an email. 

Taxpayers had footed $100 million worth of bills for MNLARS by the end of 2018. Legislation earlier this year to temporarily bail out the software system added another $13 million to that cost, and the deputy registrar reimbursements added $13 million more.

The $56 million cost of building a new system brings with it the promise of a new name, which Beaucage said she was happy about.

“I do have hope,” she said. “I think that probably was a wise decision to just say, you know, I think that (the MNLARS name) is probably just a negative thing that should just be done.”