Four months into the problem-plagued rollout of Minnesota's new vehicle licensing system, Gov. Mark Dayton apologized Wednesday for its failures while the state's top technology official conceded that the $97 million program should have undergone more testing before its release.

Both comments came on the day the state Senate Transportation Finance and Policy Committee heard lengthy testimony about how the new system has prompted delays and long lines for customers looking to renew their tabs or transfer vehicle plates, stretched the budgets of licensing centers and prevented auto dealers from completing sales.

Dayton, who previously maintained that difficulties were limited to specific licensing offices, said he's come to understand that problems were more widespread.

And under intense questioning from senators, Minnesota IT Services Commissioner Thomas Baden said he was "disappointed" about the rollout and its lingering effects, particularly on the 174 deputy registrars who operate licensing centers around the state.

"I recognize these problems we're having, and I'm not trying to dodge them," Baden said. "I have tremendous empathy for deputy registrars and I'm disappointed with the result. This is glaring red urgency for all of us."

Since the Minnesota Licensing and Registration System (MNLARS) debuted in July, complaints have flooded into the state from people who say they've waited months to receive vehicle titles or weeks to receive new tabs. Others have been completely unable to transfer specialty plates to newly purchased cars, including handicapped plates for people with disabilities.

Deputy registrars, who run licensing centers as private businesses or on behalf of cities and counties, have burned through overtime budgets as they've struggled to compensate for system delays and glitches they say the state has been slow to fix.

The DFL governor told reporters Wednesday that he learned that morning about the state's inability to transfer specialty plates, and apologized to Minnesotans who were "inconvenienced."

"Someone in the department said it was a glitch," he said. "My response was, it's not a glitch. It doesn't work."

Scott Lambert, president of the Minnesota Automobile Dealers Association, told the panel that car dealers around the state are stuck because the state can't transfer plates on vehicles that have already been sold. That means the dealers, customers and banks are all left waiting — and so is the state. He estimated that dealers are holding more than $3.5 million in registration and sales taxes that should have been paid to the state but are in limbo because of the holdup with titles and plates.

Meanwhile, dealers are being charged late fees for paperwork they filed on time, and handing out temporary permits to vehicle buyers who can't get plates.

"When MNLARS was first launched, we thought it was just a rough start, that they would apply some patches and this would all get going again and we'd be back in business," Lambert said. "We no longer think it's a bad launch. It's a bad program."

Kim Griffith, the motor vehicle supervisor for the city of Bloomington, said the licensing office there used its full year's overtime budget in the first two months after MNLARS was introduced. If the problems aren't resolved quickly and workers have to keep up that pace, she said it's likely the city may have to consider raising taxes to pay for the office.

Lawmakers pushed Baden and Public Safety Commissioner Mona Dohman about when the problems would be fixed and why they couldn't revert to the state's old software system. Both said their departments are burning through overtime hours of their own trying to resolve the issues, and said they're making significant progress.

Dohman said she expects a massive backlog of vehicle titles — about 300,000 are still waiting to be processed — to be back on track by Jan. 1. Baden said another system update scheduled for early December should resolve more of the system performance issues that have frustrated deputy registrars. He added that the state would continue to plow forward, rather than consider reverting to the 30-year-old system MNLARS replaced, because switching back would likely require another six months of work.

Sen. Scott Newman, R-Hutchinson, the committee chairman, was unconvinced. He said he's looking into bills the Legislature could take up next year to help get the system back on track.

"Despite all your efforts, the folks are still here in November with complaints," Newman told Baden and Dohman. "The bottom line is apparently you didn't see this coming and there are a lot of people in the state of Minnesota who are pretty frustrated with the way this is going."

Star Tribune staff writer J. Patrick Coolican contributed to this report.