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Knoxville Mayor Bill Haslam, who seeks the Republican nomination for governor, supports small business development as a way to increase state tax revenues.

"If we're going to grow revenue the real way and not by raising taxes, it's about encouraging business growth," Haslam said. "... A lot of it is focusing on small business and making your economic development team aware of it."

Haslam attended a Small Business Roundtable, hosted by Mountain National Bank, in Maryville on Tuesday. "We appreciate your passion for jobs and economic development and your concern for small business owners like myself," said Kevin Painter of LeConte Wealth Management, who moderated the roundtable.

The state's economic problems are driven by the decline in sales tax revenues.

"Everything is off from hotels to restaurants to sweater sets being sold at the mall," Haslam said.

The next governor will inherit a billion dollar budget deficit when stimulus funds disappear. "The challenges are going to be waiting Day One, regardless," he said.

Encouraging economic development is the preferable way to increase state revenues, Haslam said. "Tennessee doesn't have an income tax," Haslam said. "It's a good thing."

Haslam doesn't envision Tennessee raising the sales tax further, either. "I don't think we can do that for cost competitive reasons," he said.

As governor, Haslam said that he would encourage regional economic development planning.

"Every area in the state has some strength ... I've always said you can worry about your weaknesses or play to your strengths," Haslam said. "You can put together a strategy about your strengths and recruit around it."

Haslam is running against Shelby County district attorney Bill Gibbons, Lt. Gov. Ron Ramsey and U.S. Congressman Zach Wamp for the Republican nomination.

Audience comments

When it comes to state of the local economy, the members of the audience, who were primarily involved in local businesses, expressed a variety of different views.

"The market is still down about 25 percent," said Amanda Stone of Realty III.

Blount Excavating President Steve Garner said that the majority of his business now comes from various government contracts.

"Typically, five years ago, it would be 5 percent," Garner said. "Now it's 80 percent."

The size of government is not increased through people wanting to do bad things, Haslam said.

"It doesn't grow too big because people take on bad projects," he said. "... The problem is lots of things are good ideas. The hard part is you have to prioritize them and make good decisions."

Haslam also stressed the importance of Tennessee having a business-friendly environment.

"It's a competitive world out there," Haslam said. "It's a competitive world for states, too."

If the government is going to help businesses, the speed of its response needs to be improved, said Hoy Grimm, managing partner of LeConte Wealth Management. "As small business owners our advantage is we can be fast and nimble. If government is going to help, it needs to be fast and nimble,"

Richard W. Yarbrough of C2RL Inc. said that the cost of health care is the biggest issue facing small businesses. "Since we opened up the doors ... our costs have gone up 250 percent," he said.

"I don't feel there has been near enough discussion about how to control costs," Haslam said.