Parched projects: Nebraska’s water systems need fixing. The fund meant to help can’t keep up.

In the Nebraska Panhandle, less than half an hour’s drive from both Wyoming and Colorado, the City of Kimball is trying to grow. Recent investments from major local employers and the planned Air Force upgrade of missiles in nearby nuclear missile silos are expected to create new jobs — a city engineering report estimates that “the High Point of Nebraska” soon could double in size. 

To meet that growth, the city’s water infrastructure needs attention. The same engineering report showed that replacing equipment at the wastewater treatment plant likely would cost millions of dollars. Another $2.5 million is needed for better sewer lines around town, said City Administrator Annette Brower. Updating the city’s drinking water system will cost another million.

“It was a lot of, all at once, ‘This is kind of what you’re looking at in the next couple of years, so light a fire under your tush,’” Brower said.

Without deep financial reserves, the city of 2,290 people had to find outside funding. 

Kimball’s best bet: a state-run fund meant to help Nebraska cities and smaller towns pay for large drinking water and wastewater projects. The State Revolving Loan Fund, or SRF, provides low-interest loans to cities like Kimball to help them stay in compliance with Environmental Protection Agency regulations — throwing a metaphorical life preserver to communities that might otherwise drown under the debt of a large water infrastructure project.

But the SRF — mostly paid for by federal dollars — isn’t keeping up with the mounting demand for costly water projects around Nebraska. In 2003, water systems in the state requested $550 million from the fund. By this year, need had ballooned to $3.3 billion, while the state had only around $500 million in SRF funds, much of it already committed to loans from previous years.

And it soon may get worse. As a $50 billion Biden-era injection of funds nears its end, the amount of federal money sent to aid Nebraska water projects is set to plummet after 2026. 

That financial pressure gets passed on to cities like Kimball. When it came time to finance its water projects, Kimball didn’t receive SRF dollars — there wasn’t enough money available, Brower said she was told.

But Kimball’s wastewater treatment plant was facing potential “catastrophic failure” if parts of it weren’t repaired, Brower said. That could have shut the plant down and cost the community dearly in the long run. City leaders felt they couldn’t delay another year if they wanted to grow.

So Kimball took out a longer-term loan with steeper interest rates. To help pay off that debt, residents’ sewer bills soon will go up. 

“I always say it feels like a wet blanket,” Brower said. “You’ve got all this great stuff happening, but that debt ratio, it hinders you.”

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Public water systems are complex feats of engineering. In Nebraska, the majority of public drinking water systems pull groundwater from wells, rather than surface water from rivers or lakes. 

Typically, the water is treated, filtered and disinfected at a water treatment plant before being pumped and piped to households and businesses in the community. Wastewater treatment essentially follows this process in reverse, ending with the treated water being discharged back into the ground or local waterways.

Numerous literal and figurative moving parts need to work together for safe and clean water to be available at the turn of a tap. And, across the United States, links in these chains are growing old. 

Many water treatment systems were built to meet early federal environmental regulations — the Clean Water Act became law in 1972, and the Safe Drinking Water Act followed in 1974. A half century later, much of this infrastructure is reaching the end of its useful life. Buried water lines can be even older, and necessary maintenance can easily be put off in favor of more pressing expenses.

“Too often we see water systems overlooked because pipes are underground — out of sight, out of mind — we tend to take our water at the tap for granted,” said Baylee Vieyra, senior program manager at Wichita State University’s Environmental Finance Center.

Population change can drive up costs — either upgrades to handle a growing population or population declines that lower the number of residents footing the bill for needed maintenance.  

New regulations also are costly. A recent, pricey example is the 2024 revision to the EPA’s lead and copper rule, requiring that water systems replace their lead drinking water pipes by 2037. Vieyra said that water operators need to prepare for future rule changes, too, such as ones targeting “forever chemicals” and “emerging contaminants” like manganese. 

In Nebraska, public water systems of all sizes navigate these challenges. 

When describing needs for the SRF in fiscal year 2025, the Metropolitan Utilities District that delivers drinking water to Omaha and the surrounding area listed projects that would cost over $400 million, including new wells, water-main extensions and a new pump station. 

That same year, Omaha’s Public Works Department expected sewer and waste treatment project costs of over $400 million. Jim Theiler, the department’s assistant director, pointed out that they do list every possible project for the SRF, but also said it’s all work that needs to get done.

“We don’t do a project to make life easier,” Theiler said. “We do a project because we need to do a project.”

In Kenesaw, a south-central Nebraska town with 919 residents, meeting the community’s drinking and wastewater needs is estimated to cost over $10 million. Glen Kuehn, the city’s utility superintendent, said Kenesaw’s challenges were mostly from old systems — he has replaced pipes from trenches that were hand dug, with spade marks still visible on the walls.

“We’re talking at least (19)30s, ’40s is when our main part of town had gone in,” Kuehn said. “That’s just a long time.”

The Rural Water Association and the Midwest Assistance Program try to help small communities plan and implement water projects, providing knowledge and resources to towns that don’t have them. Monte Kerchal, the Midwest Assistance Program’s state field manager, called current funding challenges “the perfect storm.”

“There’s a good amount of money that comes as far as help,” Kerchal said. “The problem is it’s all hitting at once. All these communities are starting to find problems with things, and the money’s just not there to do it.”

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At the end of April, Tom Goulette traveled to Washington, D.C., to testify before the U.S. Senate Committee on Environment & Public Works. Goulette, West Point’s city administrator and president of the Nebraska Rural Water Association, was there to advocate for improvements to water infrastructure assistance programs.  

“Without meaningful grant assistance, the price of water and wastewater services would quickly become unaffordable for working families,” Goulette said in his testimony. “Especially as repairing and replacing aging infrastructure is getting harder every year, and the regulatory compliance landscape continues to grow more complex.”

What has helped, and what he was in D.C. to speak about, was the $50 billion injection into the nation’s water systems through the 2021 Infrastructure Investment and Jobs Act. That funding was spread across five years. Unless new funding is committed, 2026 will be the last year that Nebraska water systems benefit from the increased amount.

While the funding was needed, Goulette and the other water operators who testified in front of the Senate committee said that it was also just a drop in the bucket. 

A 2022 EPA report estimated that the nation will require a $630 billion investment in wastewater, stormwater and pollution control infrastructure over the next 20 years. Drinking water systems are in similar shape: A 2023 EPA report estimated that meeting the 20-year needs of the country would cost $625 billion. 

In Nebraska, records show that more communities are requesting far more money than ever before.

Every year, the Nebraska Department of Environment and Energy publishes an “Intended Use Plan” for the SRF money, containing information about the projects and communities they plan to fund. These plans also list all of the communities that submit a “needs statement” describing their water infrastructure needs and project cost estimates.

A Flatwater Free Press analysis of over 20 years of state Intended Use Plans shows that the number of communities requesting funding through this program has steadily risen to the record 446 distinct systems across Nebraska that submitted needs statements in fiscal year 2025. 

The amount of funding Nebraska water systems say they need has significantly outpaced inflation. In 2003, Nebraska communities needed a little over $250 million for wastewater and stormwater projects. By 2025: $1.3 billion.

State drinking water systems have seen a more drastic increase, skyrocketing from $300 million in needs in 2003 to more than $2 billion this year.

Steve McNulty, supervisor of Nebraska’s SRF fund, said that the trend in the number of communities seeking funding was likely due to efforts to spread the word about the program. He attributed the major spikes in requests to changes at the federal level, noting that EPA rule changes force many communities to meet new standards.

More available funding, like that provided by the 2021 federal infrastructure bill, could lead to more communities seeking funding, he said. But he also agreed that water system age and wear were a factor.

“There is no such thing as water infrastructure improving over time,” McNulty said. “Every year, it deteriorates to a certain degree.”

During his testimony before the Senate committee, Goulette pointed to his community of West Point as an SRF success story. The city recently received an SRF loan to address high levels of manganese and iron in its drinking water. 

But even West Point water operators can’t get comfortable, Goulette said. The city is now finishing up payments on a previous loan for the city’s wastewater treatment plant — which, after 20 years, soon will need to be upgraded again.

“That cycle just continues,” Goulette said. “I don’t think we can ever get complacent about this. I don’t think we’re ever going to get ahead of it, but we’re going to try to catch up with it.”