The state must get its State Historic Preservation Division in order now before millions of dollars pour in for the city's rail project and construction work starts up, lawmakers said yesterday.

At the first public discussion on the possible loss of federal funding at the SHPD due to a critical federal audit, lawmakers pushed the state to heed the recommendations outlined by the National Parks Service critique.

"It's important for rail," Sen. Clayton Hee, D-23rd (Kāne'ohe, Kahuku), chairman of the Senate Committee on Water, Land Agriculture and Hawaiian Affairs, said during a briefing at the Capitol.

"We're interested in a solution. The parks service study is very good. It points out deficiencies and clear lines of remedy. It puts the state on notice. These are all important things to move forward."

The National Parks Service last month put the department on "high risk" status because of shortcomings largely related to staffing and availability of information on important historic and cultural sites.

The parks service gave the agency two years to meet turnaround goals or face the loss of grant money.

This fiscal year, $1.1 million in matching federal grants was given to the division, which is part of the state Department of Land and Natural Resources. Losing that funding also could put the state at risk of losing out on additional federal economic stimulus money, Hee said.

Federal and state officials will meet again Wednesday to discuss the next step and how to begin making corrective actions, said DLNR director Laura H. Thielen.

She also said that many of the concerns outlined in the 138-page federal report have been addressed.

Among the possible solutions raised yesterday by lawmakers, Thielen and a university professor were:

• Investigating possible establishment of a tribal office locally to oversee Hawai'i cultural preservation. Around the country there are offices set up by the National Historic Preservation Act to ensure preservation of native cultural artifacts.

• Obtaining technical help from the National Parks Service to create an online database of historic and cultural sites identified or reviewed by SHPD.

• Restructuring the state program, including allowing those with Hawaiian studies degrees to be qualified workers under federal standards.

"The National Park Service is saying this is it or else you meet the consequences," Hee said. "The line has been drawn in the sand by the National Park Service."

FEDERAL VS. STATE

Thielen told lawmakers, however, that if the state only makes the corrections necessary to meet federal concerns, the state's mission may suffer. The office reviews construction projects referred by the counties for historic relevance and oversees the reburial of iwi, human remains considered sacred by some Native Hawaiians.

The division's work mainly involves federal projects and the National Historic Preservation Act, projects such as military construction.

"I'm concerned about state programs that are run with limited staff," Thielen said. "We have to prioritize our choices.

"Frankly, we can't do 100 percent of both to meet the federal mandate. I'm being brutally honest here. We can't do both."

The main criticism of the SHPD program is that it is inadequately staffed. Thielen said that's because of budget cuts, but the National Park Service said these issues date to 2002, long before current economic woes prevailed.

The division has long been plagued by staff turnover, including a recent exodus in personnel that has left the division devoid of any kind of institutional knowledge, according to several people who testified yesterday.

Of the 27 positions authorized for SHPD, only 14 are filled.

Glenn Mason, an architect, said the division should be filled with people passionate about saving slices of history.

"The problem goes back years and years," Mason said. "It's reached a crescendo and the problems pointed out in the report have been recognized for years. Everyone will have to work together to solve the problem, including the private sector."