For Minnesota drivers, licensing offices, headaches persist with new computer system

Nearly 12 weeks into the rollout of a new computer system for Minnesota's vehicle licensing operations, the multimillion-dollar effort continues to cause a daily barrage of problems for some of the people who operate — or depend on — the state's 174 licensing offices.

People report being over- or undercharged for their plates and tabs, and repeated systemwide shutdowns and monthslong processing delays are beginning to strain cities, counties and individuals who run the license centers as private enterprises.

State officials, including Gov. Mark Dayton and leaders of the Department of Public Safety (DPS), maintain that early glitches prompted by the transition from a 30-year-old system have largely been addressed, and they say most people won't encounter problems at licensing offices.

But license center operators like Vinton Lewis, who owns the Quick-Serv License Center in South St. Paul, fear that some of the offices, known as deputy registrars, could be forced to shut down if the problems aren't resolved quickly. Lewis, who runs the licensing center with his wife, Janet, has been pulling money out of his retirement account to cover for a weekslong drop in business and surge in overtime costs.

"It's affecting every aspect of our citizens out there, and our businesses," Lewis said. "It's disaster, total disaster."

The $97 million Minnesota Licensing and Registration System (MNLARS) has been in the works for nearly a decade. (To date, the state has spent $79 million.) Officials promoted the mid-July rollout as a relatively quick and painless transition, providing licensing offices and Minnesotans with a quicker, more efficient way to do business.

The state has since acknowledged that it didn't go as planned; system slowdowns and confusion prompted some licensing offices to close or cut hours and left customers waiting weeks for their tabs and titles.

Cassandra O'Hern, deputy commissioner of the Department of Public Safety, said officials have been in close communication with deputy registrars and have fixed most of those issues.

"The situation as it stands right now is that most people are able to complete their transactions, whether it's in a deputy registrar's office or online or by mail," O'Hern said. "There are some very specific transactions where individuals have had trouble doing that, and deputy registrars know how to contact DPS for help."

Deputy registrars around the state paint a different picture. Several told the Star Tribune or testified at two recent legislative hearings that it can be tough to get someone from the state on the phone.

"Sometimes you will get lucky, and someone will pick up within a few minutes," said Stephen Neiswanger, the deputy registrar in Mower County. "Sometimes it's a half-hour."

At the South St. Paul office, managers said slowdowns are so significant during busy times that they send workers on lengthy lunch breaks because they can't complete transactions. In Kandiyohi County, licensing supervisor Deb Mickle said the new system repeatedly miscalculates what customers owe for new tabs or a license plate.

In one case, the system calculated that a man registering a late-model pickup truck owed just $51, far less than the fee for a vehicle of that value. Mickle told lawmakers that the state's response amounted to a shrug: They told her to tell the customer "it was his lucky day."

"We are now doing transactions we know are wrong, and we're collecting the wrong amount of fees," Mickle said.

Meanwhile, deputy registrars say the state has been slow to collect some of the millions of dollars in revenue they generate every week — money used to fund transportation projects statewide. The discrepancies caught the eye of Legislative Auditor Jim Nobles, who's planning a formal audit in early 2018.

A spokesman for the Minnesota Management and Budget office said the Department of Public Safety's Driver and Vehicle Services Division is behind in updating records in the new system, which means it's also behind in "sweeping" state money out of deputy registrars' bank accounts.

Cities and counties, which operate about 100 of the licensing offices, could also see an impact. Jim Hirst, lobbyist for the Minnesota Deputy Registrar's Association, said high overtime costs or reduced revenue could force local governments to take money from other operations to subsidize licensing offices expected to be self-sufficient.

"They would be dipping into property tax rolls, and those funds should be used for other purposes," he said.

Deputy registrars say other issues the state considers relatively minor, like the slowdown in processing transfers of specialty plates, are having a major impact on many residents.

Mandy Oestreich, title administrator at Rollx Vans, a Savage manufacturer of vans for people with disabilities, said many customers have been unable to transfer handicapped plates for new vans. She said the state's solution has been to issue a series of temporary 21-day permits — the yellow papers that go in the back window — and to tell customers that Minnesota law enforcement officers will give them a pass.

One customer is now on a fifth 21-day permit, she said.

Auto dealers are struggling to get vehicles off their lots because of the system switch. Amber Backhaus, vice president of public affairs for the Minnesota Auto Dealers Association, said many dealers are being charged late fees for paperwork they turn in on time because the deputy registrars' offices can't get to it fast enough.

"It's really gone backward in terms of efficiency," she said.

Some lawmakers say they are paying close attention to the rollout, particularly because it's only one step in a longer process. The next one, when the state changes the way it handles driver's licenses, is expected to be an even bigger task. It will coincide with next year's transition to new licenses that comply with the federal Real ID law, a time when most Minnesotans will have to visit licensing offices to get their new IDs.

Rep. Paul Torkelson, R-Hanska, the chairman of the House Transportation Finance Committee, said he understands the registrars' complaints (he's still stuck with a 21-day permit on a new truck he registered more than 21 days ago.) He said he's beginning to wonder if the state should seek an outside company to complete the system upgrade.

"Things are not going well," Torkelson said. "Frankly, we're 11 weeks into this and having many of the same issues we had when we first started."

Dayton said he's convinced the state's in-house work on the new system is the most economical and practical way to complete a much-needed overhaul. He said DPS officials have been responsive and that the state will be better off with the new system even if the change is sometimes painful.

The governor said the scale of the problems is far less significant than those faced by the state when it rolled out an online system for MNsure, the state-run individual health insurance marketplace, a few years ago.

"Some legislators are trying to make this look like another MNsure, and I totally dispute that," he said.

erin.golden@startribune.com 612-673-4790