Extended access to lead service line funds considered

The Appropriations Committee heard testimony March 18 on a measure intended to ensure that state funds for lead service line replacement remain available for that purpose.

Lawmakers created the Lead Service Line Cash Fund in 2023 to fund grants to a metropolitan utilities district to remove and replace lead service lines. Omaha is the only metropolitan class city in Nebraska. Under current law, all existing grant funds must be expended by June 30, 2025.

LB580, sponsored by Omaha Sen. Machaela Cavanaugh, would require that any funds remaining in the Lead Service Line Cash Fund be reappropriated for fiscal year 2025-26 to the state Department of Environment and Energy for the purpose of lead service line replacement.

Cavanaugh said lead exposure in drinking water is a serious public health concern, especially for children and young adults, that can cause developmental delays and learning difficulties. Lead service lines are prevalent in older homes, she said, and Omaha has up to half the state’s inventory of residences with such water lines.

All $8 million allocated to the Metropolitan Utilities District for lead service line replacement is under contract, she said, but some of the work won’t be completed before the deadline and the program operates on a reimbursement basis. MUD has the option under current law to access the remaining funds as a loan, she said, but doing so would incur costs to the district.

“The fiscally responsible thing for this committee would be to honor the [initial] allocation, reinsert the available funds in the biennium budget and allow MUD to avoid interest payments and additional fees in order to secure the funds remaining in the Lead Service Line Cash Fund,” Cavanaugh said.

Rick Kubat, testifying on behalf of MUD, supported the bill. Water is delivered to residences through service lines that are owned by homeowners, he said, and lead from those lines can leech into water entering homes even though MUD’s distribution system itself does not contain lead.

Kubat said MUD is under an unfunded federal mandate to replace all lead lines within the next decade and, while work is “ramping up,” the existing deadline likely would mean that about $3.5 million already under contract for service line replacements won’t be reimbursed in time.

“We need literally six or nine months to be able to pay our contractors out for that work,” Kubat said.

No one testified in opposition to LB850 and the committee took no immediate action on the proposal.