James L. Propotnick, a retired First Deputy U.S. Marshal for Hawai'i, agreed to serve as the public safety department's interim director, Lingle said in a written statement.

Propotnick retired after a 28-year career with the U.S. Marshals Service. He is a licensed private investigator and works on a contract basis for the FBI's Background Investigation Contract Service.

Watarai, 58, an assistant chief for the Honolulu Police Department, had been announced as Lingle's public safety director nominee Dec. 23. But yesterday he said he was declining the position because he recently learned his retirement package would not have provided enough long-term financial security if he left the Honolulu Police Department to take the directorship. He will stay on at HPD, he said.

"Either way I would do it ­ if I retired now from HPD and went into that job, or transition into the state without retirement ­ either way, the numbers just didn't work out," said Watarai, a 38-year police veteran. "No matter what angle I tried to work out, it just didn't work."

Lingle's chief of staff, Bob Awana, a longtime friend of Watarai, said: "Steve is an outstanding public servant, and we are disappointed that his family's economic future prevents him from taking this position. We have accepted his withdrawal as nominee as director of Department of Public Safety, and we wish him well."

The average annual salary for an assistant chief is $92,110. The public safety director position pays $85,302 a year. Watarai said he met with state Employees' Retirement System officials on Jan. 3 and with his financial adviser on Jan. 4.

It became clear on Monday the figures would not work out, according to the Lingle administration.

Some had concerns about Watarai's nomination, which needed confirmation from the state Senate.

One of them was Senate Judiciary Committee Chairwoman Colleen Hanabusa, D-21st (Nanakuli, Makaha), who questioned whether Watarai had the skills to do the job. Hanabusa, whose committee would have handled Watarai's confirmation hearing, also had other concerns that she would not disclose.

Also troubling the nomination was Watarai's connection to ongoing investigations by the HPD Internal Affairs Division and the city Ethics Commission. Watarai has denied charges that he ordered officers to work at a May golf tournament and told them they would be paid for the next day when they were off. The tournament was a fund-raiser for the nonprofit Honolulu Police Relief Association.

Lingle had said she knew about the investigation and said she saw no problem.

Both Watarai and Awana said Hanabusa's concerns and the investigation had nothing to do with Watarai's decision.

"That was kind of expected, that everybody would look into that," Watarai said. The retirement issue "was totally unexpected," he said.