Because schools' limited cash flow prevents them from responding quickly to sudden changes in the economy, they need a stable revenue source. Property taxes have historically satisfied this need. During both good and bad economic times, property taxes have been consistent and stable. It is an open question whether replacement revenue sources would measure up to the same criteria. However, it is important to note that over the last ten years, including the brief economic downturn in the early 1990s, growth in income tax revenues have outpaced growth in property tax revenues.
Adequacy refers to schools' capacity to meet state and federal mandates.
In addition, schools must build in annual incremental salary increases for teachers. Whatever revenue source or mix of revenue sources might replace the property tax, they must generate enough funds to meet state and federal mandates and teachers' salary increases. Discussions at the June 22 symposium addressed these and other issues related to alternative tax structures and their effects on Indiana school finance. The next section of this report summarizes the panel presentations. Lutz and Johnson, p. 9. v Ibid.