After securing $1.5 million last week from state lawmakers, supporters of financially strapped 'Iolani Palace are looking toward next year's session when they may propose setting in place a more permanent stream of money.

"We are very grateful for the support that we got from the Legislature," said Alice Guild, executive director for the Friends of 'Iolani Palace, which operates the landmark building where Queen Lili'uokalani was overthrown 113 years ago and which continues to be a symbol for the Native Hawaiian movement.

"We are going to be speaking with the governor and legislators who have expressed an interest in assisting us in finding ways for permanent funding," Guild said.

In recent months, Abigail K. Kawananakoa, daughter of the Friends founder — the late Lili'u-okalani Kawananakoa Morris — pitched in $100,000 to help cover the cost of payroll and rising electricity bills. Kawananakoa is a descendant of King Kalakaua, who built the palace in 1882.

The state budget approved last week gives the Friends $600,000 for day-to-day operations and $900,000 for planning and design of a long-sought replacement for an antiquated air-conditioning and security system.

Palace officials reported losing $165,000 during the first seven months of the 2005-2006 fiscal year, largely as a result of skyrocketing electric bills.

In the past year, Guild has estimated that the electric bill increased from about $13,000 a month to $20,000. In addition, she has said the Friends are paying a monthly average of about $12,000 for repairs and labor costs associated with the air conditioning.

The state-allocated $600,000 grant-in-aid represents about half of the palace's annual operating budget.

Supporters are looking to Sen. Clayton Hee, D-23rd (Kane'ohe, Kahalu'u), as a key backer for full palace funding.

"The palace is a treasure," Hee said, calling financial help from the Capitol "long overdue."

Palace officials trace their money woes back to 1995, when the administration of Gov. Ben Cayetano, in the midst of a fiscal austerity program, trimmed the group's $500,000-plus annual subsidy over three years before entirely eliminating funding for operating expenses. At the time, palace officials said, the group — established in 1966 — was relying on the subsidy for about 56 percent of its operating budget.

The administration also swapped the Friends' management contract with the state for a group lease, through which the Friends pay rent but keep revenues from admission and gift shop sales.

While the state has provided capital improvements money in the past decade, it has provided the palace no operational funding since 1998.

"The agreement is backwards; the state should be paying the Friends of 'Iolani Palace to run the palace," Hee said. "Right now, the Friends is paying the state to run the palace."

Rep. Scott Saiki, D-22nd (McCully, Pawa'a), proposed that the palace be given a dedicated, annual source of money from a share of revenues derived from ceded lands, former crown and Hawaiian kingdom government lands held in trust by the state.

Senate Bill 1294, which will provide Mauna 'Ala, the Royal Mausoleum, with $180,000 annually from ceded land revenues for operations, was approved by the Legislature last week. Saiki said he was ready to include funding for the palace in the Mauna 'Ala bill but was told by Guild that members on the board of the Friends would not be able to consider the offer before the session wrapped up last week.

"The palace is similar to the Royal Mausoleum in terms of historical significance and we should look at a similar funding stream for the palace," Saiki said.

Guild said that receiving ceded land monies is not the only option that should be explored. "We will be looking at all the alternatives," she said.

Former Friends president Oswald Stender, who helped lobby lawmakers for this year's palace funding, said he backs Saiki's idea.

"I'd like the palace to get the same deal that Mauna 'Ala got," Stender said. "It's the same mission — preservation of a historic site. And both have the same purpose."

Saiki echoed Hee's concerns about the long-term financial picture of the palace. "Obviously, there is a need to examine cost-sharing because revenues aren't keeping up with expenses," he said.

Hee said it doesn't matter to him whether the funding comes from ceded lands or another source. "It should be a dedicated funding source," he said.

Guild said the infusion of state money will free up the board and staff to concentrate on more than just staying afloat.

"This will allow us to refocus on our education and other programs we have been anxious to begin working on," Guild said.

In an effort to expand visiting hours without overtaxing docent staff members, the museum is in the midst of establishing an audio-guided self-tours program. The expanded hours are expected to begin next month.

Under the $30,000 program, docent tours will continue in the morning, with audio-guided tours in the afternoon. Besides English, the audio tours are expected to be in Hawaiian and Japanese.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com.