SACRAMENTO -- Saying California is losing billions of dollars in potential revenue, two Republican lawmakers on Thursday proposed requiring the state to determine how much property it owns, sell off any surplus and ensure it gets fair-market value on leases.

Despite owning thousands of properties -- including the Los Angeles Memorial Coliseum, 752 residential rental units in Sacramento and a university research facility in Tahiti -- the state does not have a central database that lists its assets, which in many cases are sitting vacant or being leased to private and public sector entities at rates well below market value, the lawmakers said.

"It does not make sense to me that the state's taxpayers own the L.A. Coliseum and get about $80,000 a year from L.A. If Los Angeles thinks it's an asset, then Los Angeles should pay for it," said state Sen. Jim Battin, R-Palm Desert.

Battin and Sen. Jeff Denham, R-Modesto, disclosed proposals they say could possibly net California billions of dollars to pay for services that are on the chopping block due to a projected $17 billion deficit.

The senators said Gov. Arnold Schwarzenegger endorsed their effort during a private conversation Battin had with the Republican chief executive Wednesday. Fred Aguiar, the governor's cabinet secretary for the agency that oversees the state's assets, confirmed that Schwarzenegger has directed him to fix this problem. Aguiar said he is actively working to do so.

The governor in February launched the California Performance Review, an internal audit designed to ferret out wasteful spending at all levels of government. Aguiar said the 10 bills introduced by Battin and Denham would help achieve that goal, and said Schwarzenegger, unlike previous governors who prioritized this effort, plans to see it through.

"This governor is committed to getting our arms around this problem and resolving it," said Aguiar, who oversees the State and Consumer Services Agency.

As Battin and Denham discussed their proposals, Assembly Budget Committee Chairman Darrell Steinberg, D-Sacramento, held the first in a series of hearings called by the Democratic leadership to uncover and eliminate waste, fraud and abuse in government.

Democrats are responding to Schwarzenegger's call for government efficiency, hoping that will make it easier to maintain current spending levels for taxpayer-subsidized health care and welfare programs in the midst of a long-term, structural budget deficit. Officials foresee a shortfall of $7 billion in fiscal year 2005-06 even though voters approved Schwarzenegger's $15 billion fiscal recovery package on March 2.

"It's something we should probably do on a regular basis, regardless of whether there's a budget crisis going on or not, as a way of monitoring how our state is performing fiscally," said Assembly Majority Whip Lloyd Levine, D-Van Nuys, appointed to the subcommittee investigating state purchasing.

Battin and Denham said the immediate sale of surplus state property could reduce the need for spending cuts and generate money for highway projects in time for the 2004-05 fiscal year that will start July 1.

Among prime candidates for sale or renegotiation are many properties owned by the California Department of Transportation, including a nine-hole Oakland Hills golf course with a two-story driving range, golf shop, bar and restaurant, purchased in the 1950s to create right-of-way for a long-since scrapped highway. A vacant San Diego warehouse owned by Caltrans was appraised at $2.5 million in 1988.

Revenue from any property sold by Caltrans would go into the ailing State Highway Account. But even if the golf course is not sold, the senators argue that the $800 paid to the state in annual rent is not enough for the property surrounded by homes worth more than $1 million each.

"That's a position that you've got to look at as a business, and California should be run more like a business," Denham said.

In one deal currently in escrow, California sold 470 acres of vacant property, which had been owned by the Chino Institute for Men prison, to a developer. The state's general fund will get about $120 million from the deal that includes selling an additional 140 acres to the city of Chino and 100 acres to Chaffey Community College for a satellite campus.

Through Senate Bills 1750-1759, Battin and Denham call for an analysis of state holdings -- including a massive automobile fleet -- and decisions on what to sell, what to keep, what leases should be renegotiated and how best to maximize spending power. They want:

Creation of a commission on asset review and divestiture, consisting of 12 members who serve four-year terms. Every two years the commission would review utilization of the state's assets.

Creation of a central database, available to the public, of all state properties.

All property declared surplus by one state agency to be sold unless another agency claims it within two months.

Centralization of automobile purchases in one agency to maximize the state's volume buying power.

The law changed so the sale of Caltrans-owned property could be used to fund highway projects, not just mass-transit projects as now required.

Battin said the proposed reforms are crucial for the state to continue providing essential services to the poor and disabled.

"I have people who come into my office in wheelchairs; they tell me exactly (how) these cuts that we're going to be doing and have proposed will impact them," he said. "And I have to tell them as best I can that we're going to try to help you and protect you."

Thursday's three-hour Assembly hearing, meanwhile, focused on the state's regional centers. Representatives of Schwarzenegger's Finance Department, the nonpartisan Legislative Analyst's Office and the Department of Developmental Services testified mainly about trying to get more federal funding for state programs.

The next hearing, scheduled for Monday, will be on child care. Future hearings will target the prison system, Medi-Cal fraud, state purchasing and information-technology procurement, tax-credit evaluations and abuse of tax shelters.

"We have to help lead a more forthright conversation about what we want as a state and how we pay for what we say we want," Steinberg said in an interview.