Senate Energy and Natural Resource committee advances Small County PILT Parity Act

Key Takeaways

On July 17, the U.S. Senate Environment and Natural Resources Committee advanced the Small County PILT Parity Act (S. 1175). Led by Sens. Steve Daines (R-Mont.) and Catherine Cortez Masto (D-Nev.), this measure would amend the Payments in Lieu of Taxes (PILT) formula to provide fairer program funding to counties with populations smaller than 5,000. 

The legislation would bring needed fairness to the PILT formula and support rural counties tasked with providing government services on and around federal land to residents and visitors alike. NACo previously submitted a letter of support for the bill and urges the Senate to take up action on the legislation.

Read NACo letter

Background

The PILT program provides funding to counties with federal land within their borders managed by the Department of the Interior. Although counties principally raise revenue through property taxes, federal land is untaxable. More than 60 percent of America’s 3,069 counties are home to federal land, and public land is a vital economic and community resource in counties nationwide. Funding from the program goes to essential government services like public safety, infrastructure maintenance and emergency response. Since the program’s creation in 1976, more than $12.6 billion has been distributed to local governments. 

County Impacts

The formula used to determine how much money a county receives contains a population floor at 5,000 which disadvantages smaller rural communities. When counties’ PILT payments are calculated, these smaller counties see their portions unfairly capped and are treated as if they have more residents than they do. Counties in this category provide the full range of government services with the tax base of just a few thousand residents.

In March 2025, Senators Daines and Cortez Masto introduced the Small County PILT Parity Act. The bill would add additional population tiers below 5,000 to the portion of the formula, affecting more than 160 counties across 25 states. In December 2025, the Committee held a hearing examining the bill’s impacts.

More than 40 counties would have received higher payments in 2025 had the PILT formula been fairer for smaller counties. Changes to formula would better support rural counties with high proportions of federal land ownership but low populations. 

Next Steps

The bill now awaits a vote before the whole Senate and then consideration in the U.S. House of Representatives. NACo urges lawmakers to act on the bill to ensure small counties receive fair PILT payments to support critical local government services.