JOHNSON CITY -- Knoxville Mayor Bill Haslam announced Tuesday that he will seek the Republican nomination for Governor of Tennessee in 2010.

Haslam's announcement had been expected since Sunday, when former U.S. Senate Majority Leader Bill Frist, also a Republican, told supporters he would not be in the race.

On Monday, he asked Northeast Tennessee news media representatives to join him for lunch at the Red Pig Bar-B-Q in Johnson City on Tuesday, then made his announcement early Tuesday. Haslam was accompanied by his wife, Crissy.

Asked why he is running, Haslam, who is 50, said "This is a critical time for our state," with a $1 billion shortfall in the budget projected this year.

"Times like this require someone with executive experience," he said, pointing out his experience as the former president of Pilot Oil Co., a major convenience store and gasoline chain based in Knoxville, and as mayor of Knoxville since 2003.

Haslam was elected mayor in 2003, and re-elected in 2007, receiving 87 percent of the vote in his re-election campaign.

He said that, during his tenure, Knoxville has achieved the highest credit rating (AA+) in the city's history, and added that its "rainy day fund," or general fund balance, is two-and-a-half times as large as it was when he took office.

If elected, Haslam said he would focus on economic development through job and industry recruitment, and on K-12 education.

"Despite the efforts of a lot of really good people who are very committed, Tennessee is ranked 39th out of 50 states in educational achievement," as measured by standardized tests, Haslam said.

He said "creative solutions are happening around the state" which "an entrepreneurial governor can leverage" for statewide benefit.

He said "Project Grad," which he has chaired, has increased Knoxville's inner-city graduation rate and has also increased the number of inner-city students who go on to college after high school.

Another program he mentioned is "Knox Achieves," which he said makes $1 million per year available to give scholarships "to help 500 kids" who are the first in their families to attend college.

Haslam said not only the state's budget but also "individual family budgets are hurting."

In the last week of December 2008, he said, Tennessee issued 99,400 unemployment checks, almost three times the 35,000 checks he said were issued in the last week of 2007.

"It's going to be a challenge," he said.

Knoxville does not have its own school system, but jointly administers and funds the Knox County system, Haslam said. Knoxville gives three-fourths of the city's sales tax revenues to K-12 education.

"In these challenging economic times, Tennessee needs a leader who has experience managing a budget and prioritizing resources," Mayor Haslam said.

He continued, "We need a leader who can restrain spending while creating good jobs, making our schools stronger, and ensuring Tennesseans have access to affordable healthcare.

"I believe my executive experience in private business and as mayor has taught me how to be this leader. Over the course of the campaign, I look forward to sharing my experiences and ideas with citizens across our great state."

Mayor Haslam's announcement was part of a two-day statewide tour with planned stops in Knoxville, Chattanooga, Nashville, Jackson, and Memphis.

He said that, as mayor, he has helped reenergize Knoxville's downtown area, balanced six consecutive city budgets, and recruited hundreds of jobs to the city.

As a result of his leadership, he said, Knoxville has repeatedly been named one of the top 10 metropolitan areas for "business and expansion" by Forbes Magazine.

Before becoming mayor, Haslam served as president of Pilot Corporation and CEO of Saks Direct, an e-commerce and catalog division of Saks Fifth Avenue.

He is also the principal owner of the Tennessee Smokies East Tennessee AA Baseball Team.

Haslam has served as chairman of the board for a number of Knoxville community efforts, including the United Way of Greater Knoxville, Project Grad, the Salvation Army, Young Life, and the East Tennessee Center for Non-Profit Management.

He has also served in leadership roles with the Cornerstone Foundation (Advisory Board), Knoxville Museum of Art (Vice Chair), Foothills Land Conservatory (Campaign Chair), and Nine Countries, One Vision (Diversity Task Force).

He and his wife, who accompanied him to Johnson City, have two daughters, Annie and Leigh, who are in college, and a son, Will, who lives in Knoxville with his wife, Hannah.

Haslam and his family are active members of Cedar Springs Presbyterian Church, where he has served as an elder for 18 years.

Besides Haslam, Chattanooga Congressman Zack Wamp, Lt. Gov. Ron Ramsey, of Blountville, and Shelby County District Attorney Bill Gibbons have each expressed interest in the GOP nomination for governor, although Haslam is the first to formally declare his candidacy.

He said he believes it will cost $5 million to run a credible statewide primary campaign.

Last year, political candidates who received contributions from Haslam or members of his family were painted by opponents as having "ties to big oil." With gasoline then selling for $4 per gallon, the accusation stung.

Haslam said he expects that topic to be raised, but thinks it's not legitimate, pointing out that distributors such as Pilot "are, like everyone, subject to the rises and fall" of oil and gasoline prices.

"I'm not embarrassed about it," Haslam said.

He called Pilot Oil Co., which his father, Jim Haslam, founded 50 years ago with one gasoline station in Gate City, Va., "a great, locally-owned company" that creates a lot of jobs by providing good service and value.