HILO, Hawai'i — Former state Chief Labor Negotiator Ted Hong formally declared he will run for the state Senate, setting up a contest for an open Big Island seat with veteran Democratic state Rep. Dwight Takamine, a longtime favorite of the state's labor movement.

Hong's campaign announcement did not mention he is running as a Republican, but Hong said he is not trying to downplay his GOP party affiliation.

"I think it's an important distinction because one of the main concerns I have is we have to be fiscal conservatives," he said. "We're taxed way too high in this state, and we spend way too much in terms of state government, and we really need to focus on making sure that the taxpayers get the biggest bang for their buck. Spend it wisely. We're not doing that."

The District 1 seat includes traditionally Democratic neighborhoods in Hamakua and Hilo, but also includes more Republican-leaning neighborhoods in Waimea. The seat will be vacated this year by Democratic Sen. Lorraine Inouye, who has announced she is running for Big Island mayor. Hong's announcement came last week.

The race will be closely watched because both Hong and Takamine are well-known candidates, and because there is only one remaining Neighbor Island Republican left in the entire state Legislature. That lawmaker is state Sen. Paul Whalen, District 3 (Kohala, Kona, Ka'u).

Hong, 50, has a private law practice in Hilo specializing in labor law. He is a former Honolulu deputy prosecutor, and from 1993 to 2000 served as assistant corporation counsel and corporation counsel for former Democratic Mayor Stephen Yamashiro.

Hong was active in Republican Gov. Linda Lingle's campaign on the Big Island, and was University of Hawai'i regent for East Hawai'i in 2003 and 2004. Hong also served as Lingle's chief labor negotiator in 2003 and 2004, a job that put him at the bargaining table opposite the formidable public worker unions.

When Lingle nominated Hong to become a Big Island Circuit Court judge in 2004, the state Senate rejected the nomination in a narrow 13-12 vote after the Hawai'i State Bar Association took the rare step of rating Hong as unqualified for the judgeship because of his "judicial temperament."

That marked the first time in more than a decade the Senate had refused to confirm a judicial nomination, and Hong said at the time he believed he was turned down because some disliked his blunt, outspoken demeanor.

In a written statement announcing his campaign plans, Hong advocated breaking the University of Hawai'i-Hilo away from the existing university to create a new "Hawai'i State University," and proposed a mandatory repair and maintenance fund for schools "that can't be raided by politicians."

Hong also proposed ethics reforms for state legislators including a ban on any gifts and "junkets," and a ban on fundraisers during the legislative session each year. He also endorsed a Lingle administration proposal to terminate taxpayer-sponsored pension benefits for government officials or employees convicted of crimes such as theft, bribery, campaign spending or procurement violations.

Takamine, who is also a lawyer with a practice focusing on labor issues, enjoys a number of advantages in the race. The district has traditionally tended to be Democratic and labor-friendly, and Takamine is regarded as close to Hawai'i's labor movement. Takamine has also represented Hamakua and North Hilo in the state House since 1984, which means he is well-known to voters in the Senate district.

He was House Finance Committee chairman for seven years, which is one of the most powerful positions in state government because the chairman has extraordinary influence over state spending. Takamine lost that post during the House reorganization in 2006.

Takamine said the top issues in the race are education and healthcare, with new investment needed in public schools, Hawai'i Community College and the University of Hawai'i-Hilo.

State lawmakers this year will work to address the shortage of doctors on the Neighbor Islands, and Takamine said financial and other incentives are needed to encourage doctors to relocate to the Big Island or continue to practice there. He said something similar to an "enterprise zone" to provide tax incentives to doctors is an idea that deserves serious consideration.

Takamine also cited environmental protection and infrastructure support for a strong economy as major issues "so that our children can remain on the island, or more of them can come back home."

Reach Kevin Dayton at kdayton@honoluluadvertiser.com.