Business License Tax Change Has a Surprise Wrinkle : Commerce: Westminster’s revised levy has quirk that causes some arcades and self-service laundries to be hit with shockingly high bills. The city promises to correct the error.

When city officials adopted a revised business license tax last month, they said the rates for most small enterprises wouldn’t increase this year.

But when the bill arrived at Bonnie Matako’s coin-operated laundry, her brain went into a spin cycle. She estimates that the total charges will amount to more than $2,500--up from $230 last year.

“I was in total shock,” said Matako, who owns the Speedy Coin Laundry on Trask Avenue. “I thought, ‘I must be having a bad dream. This can’t be real.’ ”

Because of an error in the revised tax and permit fees, city officials said, owners of self-service laundries and arcades were wrongly hit with the high charges. Many owners were charged $50 for each machine that they operate--and Matako has 48.

Finance Director Brian Mayhew said the higher charges were an oversight the city will correct.

“Some [businesses] fell through the cracks, so we are picking them and we will get them fixed,” Mayhew said.

After the protests of several business owners, the city has agreed to review the fees on a case-by-case basis. And the city’s Finance Department is recommending that the City Council reduce the added charges, possibly at Tuesday’s meeting.

Several council members said they would support such a plan.

“It’s not our intent to drive anyone out of business,” Councilwoman Charmayne S. Bohman said. “These are things we didn’t mean to have happen.”

Councilman Frank G. Fry Jr. said: “Whenever you adopt a law, there’s always some people who are hurt disproportionately, and some adjustments have to be made.”

The new law, which was supported by the Greater Westminster Chamber of Commerce and the Vietnamese Chamber of Commerce, was designed to be more equitable by replacing a flat rate of $50 a year plus permit fees, officials said. The new levy is 0.1% of gross sales, or a minimum of $100 a year.

The average business license tax in Orange County is $123. Westminster was the only city other than Irvine that had a flat rate.

But the new system also includes a tax on machines, accidentally written in at $50 apiece, Mayhew said.

Under the new system, companies with less than $100,000 in annual revenue--about 40% of the city’s businesses--were to pay the old rate this year, increasing to $75 for fiscal 1996-97 and to $100 the following year, officials said.

Larger companies, however, will pay a maximum of $2,500 for the current fiscal year, increasing by $250 annually to a maximum of $3,500 by 1999. Utility companies, which were exempt in the past, are now required to pay.

The increase is expected to bring in an additional $500,000 a year to help balance the city budget.

“Some kind of resolution [to this] would be nice for all of us,” Matako said. “Lots of businesses here are hanging by a thread.”

Westminster Councilwoman Margie L. Rice said the charges were “ way out of line with what we thought we were passing. [City staff] assured me it was going to be less for small businesses.”