Inquiry Launched Into State’s Failure to Collect Rent From Oil Companies

California Assemblyman Rich Gordon (D-Menlo Park) is today flexing the muscle of the Budget Subcommittee on Resources and Transportation with an oversight hearing into the State Lands Commission’s failure to collect millions of dollars from revenue-generating leases.

The hearing, scheduled for today in Sacramento, follows an August audit by the Bureau of State Audits that found the commission to have mismanaged oil and other leases on public land by not collecting rent or renewing leases.

A review of 35 randomly selected money-generating leases found that 34 of those were mismanaged, costing the state $8.2 million—money that could have gone to the General Fund.

Numerous failures were documented in the report, including the commission’s failure to evict delinquent lessees, renew expired leases, conduct rent reviews or appraise properties. 

The state manages about 1,000 revenue-generating leases.

Of particular concern to Gordon is that there are “untold millions of missed opportunities since the evidence suggests that these problems are not isolated to the 34 samples,” according to a statement released by his office Monday.

“The findings of this report are troubling,” said Assemblyman Gordon. “I look forward to hearing from State Lands Commission on how they intend to correct these deficiencies and fulfill the agency’s mission of managing state lands and leases for the benefit of Californians and their schools.”

The audit recommends that the commission hire more staff in order to manage the leases; a point agreed to by the commission itself. Their staff has been reduced from 242 positions to 63 today.

The Bureau of State Audits will offer testimony today alongside the State Lands Commission and public comments.

The commission agrees with many of the audit’s recommendations. In response to the audit, the commission also highlighted the need for more staff.  Since 1990, the commission reduced staff from 242 positions to the 63 that remain today, a 74% reduction.

On Tuesday, Budget Sub-3 will hear testimonies from the Bureau of State Audits, the State Lands Commission, and allow time for public comment.