Minnesota licensing offices find themselves in red due to cuts
WILLMAR -- Every year, the offices that process driver's licenses, vehicle tabs, title transfers and boat licenses send about $1 billion to the state in the form of fee-generated revenue.
Yet those offices -- some run as a private enterprise -- are struggling to operate in the black. With a new round of cuts to city and county governments, which also operate many licensing offices, there's concern some offices may close.
The Minnesota Deputy Registrar's Association, which met recently in Willmar, will seek legislative approval for an increase in fees to keep the offices open, said Jim Hirst, lobbyist for the association.
Past requests have been denied, he said. The last time fees were increased was in 2005.
Currently, local offices receive between $4.50 and $8.50 for various motor vehicle transactions and $3.50 for processing Department of Natural Resources licenses.
"Everything else goes to the state," said Deb Mickle, deputy registrar in Kandiyohi County.
"We believe that if we do the work, we should be able to keep the fees," said Kandiyohi County Administrator Larry Kleindl.
For the last couple years, the Kandiyohi County office has been able to match expenditures with revenues, but there have been some years when that has not been true. "We try not to lose money on it," Kleindl said. "It's like any business, you try to cover your costs."
The Minnesota Department of Public Safety and its Driver and Vehicle Services have 173 offices throughout the state, said Hirst.
About 60 percent of those offices -- 99 sites -- are run by public entities, like cities or counties.
There are 74 offices, like the one in Benson, that are owned and operated as private businesses.
Most of the privately operated offices are in rural Minnesota, said Hirst. Only 12 of the private offices are in the metro area.
The employees at the public and privately run offices are "agents or middlemen for the state," said Hirst.
Bruce Jindra, president of the association, said the members are a mix of public and private operators that makes the group a "unique animal."
Kleindl said the county-run licensing bureau, which is located in the downtown County Office Building with other departments, is a service and a benefit to residents.
Cities and counties that can't afford to hire more employees and take on the cost of running another office have the option of declining to take on that task. That's where private operators come in to play.
For nearly 30 years, the Grossman family has run the licensing bureau in Benson, said Clete Grossman, who's been overseeing the business for 10 years. The bureau is housed in the same building as his plumbing and heating business, which is how he helps the licensing business cash flow.
"It comes right out of my pocket if the overhead gets too expensive," said Grossman, adding that new computer software mandated by the state and expensive printers have increased operating expenses for him.
"I've been able to keep ahead, but it has been challenging at times," said Grossman. "We only get paid for what we do. That's why we like to keep it local."
All the offices, which receive a percentage of the fees processed at their site, are "very well run," Hirst said, but they're operating on a slim margin.
That margin was made worse a decade ago when the state allowed residents to register vehicles online. When that happens, the state receives the entire filing fee, instead of sharing it with the local office.
But when that angry online customer doesn't receive his license tabs in the mail, said Hirst, they go to the local office which then does the work and provides the tabs but is unable to collect any fees.
The state's online registration threw a "huge monkey wrench" into the business plan of local offices, said Hirst.
If too many people use the online service and revenue continues to decrease, local offices may be closed, which would create a "void in customer service."
The recent cuts in government aid could be the "straw that broke the camel's back" for some public entities, said Hirst.
Mickle said she knows some offices are losing money. Kandiyohi County's licensing center has been able to "hold its own," she said. "I'm thankful for that."
Besides seeking a rate increase, the association is also requesting that online customers be allowed to register electronically through their local office so that fees will continue to go there.
Mickle said the Mills automobile dealers are also cooperating with licensing bureaus to provide registration, license plates and tabs directly from the dealer. The local licensing center would still retain the processing fees.
Another change will be happening in January when the offices will begin accepting payment with credit cards.
In order to avoid paying the 2 to 4 percent fee charged by credit card companies, customers will pay a convenience fee.
Without charging customers for that service, Hirst said local offices would lose another chunk of their revenues. "We're barely making it as it is," he said.
The convenience fee charged for using credit cards will go to the credit card companies and not the licensing office. "It's not a money-maker for us," he said.