Despite the scanty state spending expected in 2016, this year’s state capital budget may provide funding for long-deferred upgrades to Kenai’s wastewater treatment plant.

Built in 1981, Kenai’s wastewater plant discharges into Cook Inlet from an outlet in the Kenai beach mudflats. The ammonia in this discharge exceeds the plant’s August 2015 permit from the Alaska Department of Environmental Conservation, which allows Kenai five years to bring the plant to the ammonia emission limits.

Kenai has tried for the last three years to secure state funding for wastewater plant upgrades — which Kenai City Manager Rick Koch said Kenai cannot afford to fund on its own — through a DEC grant program that gives money to cities for drinking water, water conservation and sewage projects, awarding funds through a competitive application process. This year, the violation may have made a critical difference for Kenai. Gov. Bill Walker’s Dec. 15 draft capital budget gives $1,019,287 to Kenai’s sewage plant.

“There’s kind of a double-edged sword on that violation,” said Mike Lewis, DEC’s program manager for the Municipal Matching Grant. “We give them extra points on that, but we do take a little bit away because they are operating without compliance. But if they show that they’re trying to do something to move forward with it, they’ll get enough points to override that criteria. … If there’s an issue and the community’s not doing anything, then they’d probably be hurt more by not being in compliance and not doing anything about it.”

Kenai ranked high among the applicants, but its proposal was enrolled in a shrinking program. From giving out a $33 million appropriation in 2012, the DEC grant had dwindled to giving $14.5 million in 2014, and in 2015 only gave out $7.5 million. This year’s grant is set to distribute $4.1 million, although Kenai Finance Director Terry Eubank said it was uncertain whether it would give any money at all.