Licensing offices to get payouts due to MNLARS

The state will soon be sending out checks to the people who run licensing offices around the state. They're known as deputy registrars, and the money is to reimburse them for expenses related to the troubled system MNLARS.

Eligible deputy registrars, both public and private, will get a share of the $13 million that lawmakers authorized back in May.

The headaches began for deputy registrars when the Minnesota Licensing and Registration System (MNLARS) went online in July 2017. Technical problems delayed many transactions and forced local licensing staff to work long hours to catch up. Deputy registrars make their money from fees on the transactions.

"The deputy registrars were certainly hurt by MNLARS. There's no question about it," said Rep. Frank Hornstein, DFL-Minneapolis, who chairs the House transportation committee.

"They are small businesses and they incurred losses and incurred losses for no fault of their own. And so, it was incumbent on the Legislature to compensate them."

One of the privately owned deputy registrar offices eligible for compensation is in Faribault.

"The whole MNLARS debacle, if you will, set us back," said Patty Hanscom, who runs the operation. "It set us back in labor costs. It set us back in time, energy. Our volume went down, our stress went up. Our income went down. Our expenses went up."

The newly enacted state law required the Minnesota Department of Public Safety to notify deputy registrars by the end of June the amount they are eligible to receive. The grants were calculated based on each office's transactions. The $13 million was divided 179 ways, ranging from about $12,000 for Elko New Market to $347,000 to St. Paul.

Faribault is slated to receive just over $113,000 from the state.

Hanscom said she believes the amount is fair.

"It's a really unique relationship that we have with the state, because a lot of us are private businesses, and we run like a private business in every way except that we can't control our pricing. So, when our costs go up our hands are tied in adjusting our businesses in being profitable."

To receive a grant, deputy registrars had to make a formal request by June 30 and agree not to make any future claims against the state. Payments must go out within 30 days.

Sen. John Jasinski, R- Faribault, who sponsored the reimbursement provision, said one potential problem is if the state Department of Revenue views the reimbursement payments as taxable income. He believes the payments should not be taxed, but it may require a legislative fix next session.

Aside from that and some initial calculation errors, he is generally pleased with how the program is working.

"From what I understand from the stakeholders, most people are going to take the money. I think there may be one or two of the deputy registrars that have some more frustrations because they thought they were hurt much worse," Jasinski said. "But to my understanding, the majority of the deputy registrars are agreeable to taking the money and signing off and going through the process."