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Bloomington plans to close its only Driver and Vehicle Services (DVS) office, citing the $376,000 in subsidies needed in 2020 to keep the city-run amenity afloat.

The city sent out notices saying the office will close March 31 unless a private entity steps up to run it.

Some Bloomington officials say the cut is necessary to patch a $7 million hole in the 2021 budget caused mostly by decreased lodging taxes due to the pandemic's impact on the hospitality industry. But other city leaders decried the loss of a valuable resource and questioned the city's financial priorities.

"It was a service that we liked, but it was hard to justify," said Steve Peterson, co-chair of Bloomington's Community Budget Advisory Committee, a group convened to involve the public in 2021 budget cuts. "In difficult times you have to make difficult decisions."

City Council Member Dwayne Lowman, one of three council members who voted against closing the office this spring, said it's going to be difficult to explain the cut to taxpayers if the city adds staff this year, which officials are considering.

"That doesn't make sense," Lowman said. "We said we were reducing this because we had a budget crisis."

In Minnesota, DVS offices, sometimes called DMVs, may be operated by cities, counties or private owners. Of 178 in the state, 36 are city-run. Bloomington officials have noted the proximity of other DVS offices — 10 are located in the metro area.

Bloomington resident Pam Pommer said she wishes the council would have taken more time on the decision. Having the office in town is important, especially for older residents who don't have computer access to do transactions online, she said. And now lines will be even longer at nearby offices.

"Why isn't it a priority to have that service?" she said. "If you think something is valuable … you decide it's worth having taxes to cover that."

A subsidized service

Minnesota DVS offices provide services like tab renewal, issuing and renewing driver's licenses and processing vehicle registrations. Some offer the tests required to get a driver's license.

When customers pay for a service, a filing fee stays in-house while the majority goes to the state. At the Bloomington Motor Vehicle and Deputy Registrar's Office, filing fees don't fully cover operating costs, said city Budget Manager Kari Carlson.

Over the years, the city began subsidizing operational costs with revenue from processing passports and property taxes, Carlson said. In 2020, the DVS office cost $251,000 to run and received $125,000 from property taxes, making the city's total tab about $376,000, she said.

The budget committee, which consulted residents for their opinions, was reluctant to trim areas like parks or public safety, she said.

Peterson said the committee met 18 times and considered 100 different changes to ensure cuts were spread evenly.

While on the City Council a decade ago, he supported having the DVS office. But state-level changes have shifted finances over time, he said — and then the pandemic arrived and made things worse, closing the office for a period.

Peterson said he doesn't think the upcoming closure will affect the average person much. "I'm sad that it's happening, but for most people it will have a pretty minimal impact," he said.

City survey cited support

Lowman, however, said that a city survey done about six months ago showed that residents wanted to keep the DVS office open. That survey indicated that 38% of residents said closing the office would significantly impact them.

Megan Leonard, a Department of Public Safety spokeswoman, said she wasn't aware of other DVS offices closing due to COVID-19. But offices don't have to tell the state until they start the process of closing permanently or changing owners, she said.

Jeff Orth, president of the Minnesota Deputy Registrar's Association, said he doesn't know of other DVS offices that are subsidized by local governments. But Bloomington "isn't an isolated situation," he said.

Orth said the pandemic has been tough on DMVs because they've had to reduce the number of workstations available to staff in order to social distance, which means they're bringing in less money.

Carlson said she's hopeful that a private party will materialize to take over the office. Lowman said Mayor Tim Busse mentioned some interest by "private folks."

However, that transition could be difficult, Lowman said, because state rules say a DVS office cannot be within 10 miles of another office, and there are several within that distance. The Bloomington office is grandfathered in as a city service, but that exception doesn't apply if it is taken over by a private operator, he said.

City Council Member Jack Baloga called the city's decision shortsighted, noting that because of the state rule the city is unlikely to get its own office again.

"This will not only affect current residents, but residents for infinity," he said.

Erin Adler • 612-673-1781