MUKWONAGO - There are major concerns about the dam at Phantom Lake in Mukwonago. It could give way at any time, threatening everything down stream. Wednesday morning officials announced some encouraging news. They say the water level at the dam dropped 1.5 inches since Tuesday morning. "Our concern level is still high but not as high as it was yesterday," Fire Chief Jeff Rolfe, Mukwonago Fire Department, said. That threat level is increasing with more rain expected Thursday. "Obviously we do have concern with the threat of additional rain," Chief Rolfe added. Click on the links under related content to see a press conference with officials Tuesday afternoon and reports from TODAY'S TMJ4's Lauren Leamanczyk on the scene. The dam became obstructed Tuesday morning when bog vegetation blocked it, causing water to pour around until it finally cleared. That created concern about whether the dam was structurally sound. David Allen videotaped the bog getting lodged under the bridge. “The water was going around the dam because the bog was plugging up the top of it," he told TODAYS TMJ4 reporter Lauren Leamanczyk. Allen lives on Lower Phantom Lake. If the dam were to break, it's likely that lake would be emptied. “It’s a concern. That’s a lot of water to come out of this dam," he said. Officials warned residents in Big Bend, the Town of Vernon, Tichigan and Waterford to watch for water problems. Resident Annette Sather lives near the dam. She doesn't even want to think of what will happen if the dam gives way. "A lot of the businesses around here are local and small and it could hurt them significantly. I I think downstream it could put people out of their homes," Annette Sather, resident, says. Fire Chief Sather says it takes about two days for water from Phantom Lake to reach the dam. He says crews are still concerned about soil around the dam. So far they have put plastic around the side to channel water and reduce any erosion. But Mukwonago Village Clerk Steve Braatz said that even if the dam fails, water would flow into the Fox River and no homes would be in harm's way. “We're maintaining a monitoring plan to watch the integrity of the dam. It could be slightly weakened," said a DNR water engineer. Tuesday night state troopers were stationed at many area roads and highways. Highway 83 was blocked because if the dam breaks, the water would probably rise over the top of that road. Flood waters may also cover a portion of Interstate 43. By Wednesday morning, the water behind the dam had dropped about an inch, but officials were still on the scene inspecting the dam every 15 minutes. Water in some other areas, such as at the Horlick Dam in Racine County, started to recede Tuesday afternoon. But north of Milwaukee in Thiensville, the Milwaukee River overflowed its banks, sending water into the village and causing officials to close Main Street. The village park was largely under water, with softball diamonds partially covered and a picnic shelter fully submerged. Water rushed over the top of the dam, making it barely visible. Flood waters of Pewaukee Lake threatened to enter some downtown businesses where rows of sandbags were in place to keep out the water. (The Associated Press contributed to this report)