Sen. Jim Denning, center, tells the Senate Select Committee on Education Finance that a surcharge on utility bills is needed to fund an increase in education funding because sales tax revenues that go into the state general fund have been declining, mainly due to increased online shopping.

Topeka ? Senate Republican Leader Jim Denning, of Overland Park, outlined an initial draft of a school funding plan for the Senate to consider that will call for imposing a monthly fee on water, gas and electric utility bills to generate $150 million a year to help pay for it.

Denning, who chairs the Senate Select Committee on Education Finance, said the Senate’s draft bill may be released as early as Thursday, and it will include a $2.25 monthly fee on residential bills and a $10 monthly fee on commercial bills.

The Senate committee plans to start holding public hearings on the draft school finance bill possibly as early as Thursday.

But his decision to include that in the bill seemed to be developing even as he was explaining it to the committee, at first saying there was a “50-50 chance” the bill would include the utility fees, then later saying he would not include it “unless I have to, and finally saying “it will be” included, in response to a question from Senate Democratic Leader Anthony Hensley, of Topeka.

Sen. Jim Denning, center, tells the Senate Select Committee on Education Finance that a surcharge on utility bills is needed to fund an increase in education funding because sales tax revenues that go into the state general fund have been declining, mainly due to increased online shopping.

Denning said he thinks a new revenue stream specifically earmarked for education is needed because the state general fund “cannot handle the stress of K-12 funding.”

“When we have a dip in a recession, a decline in oil and gas, a decline in agriculture, everything comes apart at the seams,” he told the committee. “What I was trying to do was look for something very broad, and that is the broadest fee in Kansas.”

Currently, public schools are funded through a statewide 20-mill property tax levy, plus money from the state general fund, which gets the bulk of its revenue from income taxes and retail sales taxes.

But Denning repeated what officials in the Legislature’s nonpartisan Research Department and the Division of Budget have been saying for months, that sales tax collections are projected to remain flat or even decline for the foreseeable future, mainly due to increased online shopping, where consumers can sometimes avoid sales taxes altogether.

“You can see all over the country, there are 23 states that are in budgetary issues, and a lot of it’s related to the third leg of their stool. It’s disappearing because it’s being untaxed,” Denning said.

Denning outlined parts of a Senate plan that he is having drafted as the committee was being briefed on details of another plan that advanced out of a House committee earlier this week.

It will be modeled after the House plan, Denning said. That involves returning to a base per-pupil aid formula, with various “weightings” to account for the higher cost of educating at-risk and bilingual students and the different economies of scale between large and small districts.

It would also reinstate a “local option budget” that allows local districts to raise additional money on their own through local property taxes. And it will include “equalization” formulas to subsidize the local option budgets and other local mill levies for districts that have less property wealth to tax than other districts have.

But Denning said there will be notable differences between the House plan and the one he will put on the table.

First, while the House plan calls for a $150 million increase in the upcoming school year, followed by a $100 million increase the second year, the draft Senate bill would would have a large increase in the first year, then would be adjusted for inflation each year after that, using a three-year rolling average of the Consumer Price Index as the adjustment rate.

Also, the draft Senate plan would give local districts greater authority to levy taxes to pay for big-ticket purchases known as “capital outlay,” raising the maximum property tax rate for that fund to 10 mills instead of the current 8 mills.

And the Senate bill would include a provision prohibiting local governments from granting property tax abatements from school levies in the future as part of their economic development initiatives.

As of Wednesday evening, however, the bill was still being drafted and had not yet been assigned a Senate bill number.

Sen. Barbara Bollier, a moderate Republican from Mission Hills, said the proposed utility fee is likely to meet stiff resistance, but she would not rule out the possibility of supporting it, if no other options are available.

“I will never say never, but it is not even close to my first choice,” she said after the meeting. “My absolute first choice is to have three levels of income tax. Bring in the money. My second is to have a tobacco tax … But if it comes down to the end of the session, and we have a tax bill that I did or did not vote for, and we still need money to fund schools appropriately, I can’t say I will absolutely never vote for it.”

Democrats, meanwhile, said they believe the plan is inadequate.

In a memo to House and Senate leaders that was distributed to all legislators and the media, Hensley and House Minority Leader Jim Ward, of Wichita, said Denning’s plan would only raise base per-pupil aid by $228, to $4,080, which they said is far short of what they believe the Kansas Supreme Court is expecting.

“We believe that any school finance plan which falls short of providing (base per-pupil aid) by (fiscal year) 2020 of at least $4,500 per student … will not be ‘reasonably calculated to address the constitutional violations’ of the adequacy requirement,” Hensley and Ward wrote, quoting language from the Kansas Supreme Court’s March 2 order holding current funding levels unconstitutional.

They also noted that the Kansas State Board of Education recommended raising base per-pupil aid to $4,604 next year and to $5,090 in the 2019-2020 school year, a plan that would cost an estimated $825 million over the two years.

“We would also note that $4,500 per student is only $100 more than the $4,400 ‘high water mark’ we achieved under the previous formula in the 2008-2009 school year, which would equal a $12.50 increase each year over the last eight years,” they wrote.

Denning suggested in the meeting, however, that he had not settled on a final figure.