Lawmakers question MNLARS costs, while staff say money is needed immediately

Republican lawmakers criticized the administration of Gov. Mark Dayton on Tuesday for the botched rollout of the state's vehicle license and registration system, even as officials warned that without a $10 million infusion this week, they would have to start laying off workers desperately needed to continue the upgrades.

"We know Minnesotans want a DMV system that works, but we are not going to give a blank check to the governor of Minnesota," said Rep. Paul Torkelson, R-Hanska, the chairman of the House Transportation Finance Committee. "We want accountability. We want assurances that we are not simply throwing more good money after bad."

At a tense committee hearing, legislators questioned why the $10 million request did not come earlier. And the request doesn't stop there: the DFL governor seeks a total of $43 million to fix the Minnesota Licensing and Registration System (MNLARS), after spending at least $93 million on the project so far.

"You're either part of the problem or you're part of the solution," Dayton said Tuesday. "It's going to go from bad to worse unless we have the resources available."

State agency leaders who are overseeing the system told representatives they are looking into why it was launched in July when it still had so many problems. But meanwhile, they said they need to keep working on reducing the backlog of vehicle title requests and repairing its glitches and gaps.

Shortly before the hearing, Torkelson said Dayton should use money from his own budget to pay for the ballooning costs of system repairs — presenting a measure that would use $10 million from Dayton's executive agency funding to pay for MNLARS. Dayton had instead asked to use revenue from Driver and Vehicle Services accounts.

After hearing from the agency officials, however, Torkelson suggested another route: Dayton, House Speaker Kurt Daudt and Senate Majority Leader Paul Gazelka should get together to work out a solution.

"If this expense is a necessity, we need to go to a higher level to get it done," Torkelson said, though he still plans to introduce his bill Thursday.

The Department of Public Safety and Minnesota IT Services, called MNIT, have handled the MNLARS rollout. Officials from the agencies said they have added 101 fixes and features to the system. They proposed a road map last month to fix all "high priority defects" by June 2020.

If they do not get $10 million by Thursday, said Dana Bailey, MNIT's executive director of projects and initiatives, they would have to suspend contracts with workers, severely delaying upgrades to the system and pushing back their timeline by at least half a year.

The governor had breakfast with House and Senate leaders Tuesday, and said he told them about the problems the state will face if they do not get the money.

"We're going to have to start giving notices to vendors, as well as to MNIT's staff. They're going to leave and we're going to set the effort to remediate this back even further," Dayton said.

Kelly Davison, who runs a deputy registrar office in Prior Lake that processes vehicle registrations, said the state should not cut back the number of people working on repairs.

"Many, many of us are in dire straits right now, because it's gone on for so long," she said. Some deputy registrars, who operate as private businesses, have mortgaged their homes or used private credit cards to keep offices open, she said. Davison, along with members of the auto dealer and insurance industries, told House members stories of how glitches, delayed titles and other problems from the new system cost them time and money.

The House committee meeting was just the beginning of this week's discussions about MNLARS. A Senate committee will also get an update on the project Wednesday, and another House committee will talk Thursday about how MNIT handled the MNLARS system.

Sen. Scott Newman, who chairs the Senate Transportation Committee, said that before he signs off on Dayton's $43 million request, he wants to remove the MNIT and Department of Public Safety officials who were responsible for the rollout.

People who were responsible for MNLARS are not with the department any longer, Dayton said Tuesday. "I cannot talk about internal investigative actions, but we take it very, very, very seriously," he said.

New MNIT Commissioner Johanna Clyborne, who took over after previous commissioner Tom Baden retired in February, told representatives that there is "new blood" at the agency. She also said she has requested an investigation of an employee and an audit to find out what happened with MNLARS.

In addition to removing staff, Newman, R-Hutchinson, also said he wants legislators to retain some control over how the millions are spent. Dayton said he is willing to consider that.

"If they want to have oversight, if they want to have some reasonable measure of control, in addition to accountability, we certainly can talk about that," Dayton said.

"But we're at the point now where we should be past the 'let's bash MNLARS and make political points' and roll up our sleeves and solve the problem."