Photo by Caroline Miller
The Chelsea City Council meets in a work session to discuss proposals for a gasoline tax and a potential reallocation of the city's 1% sales tax for education at Chelsea City Hall in Chelsea, Alabama, on Tuesday, May 12, 2026.
The Chelsea City Council on Tuesday discussed the possibility of levying a gasoline tax in the city to help with road maintenance but balked at the idea of splitting the city’s 1-cent sales tax for education to help fund a proposed new Police Department.
Chelsea currently has no taxes on gasoline that go directly to the city government. People who buy gasoline in Chelsea pay a combined 50.4 cents per gallon in fixed federal and state fuel taxes and fees.
The federal government gets 18.4 cents per gallon in excise taxes, and the state gets 30 cents per gallon in excise taxes plus 2 cents per gallon to cover the cost of inspections.
The state retains 45% of its baseline tax of 10 cents per gallon and 66.77% of the other 20 cents per gallon authorized by the Rebuild Alabama Act passed in 2019. Together, that currently amounts to about 16.2 cents per gallon. The state then splits the rest between Shelby County and the city of Chelsea. The county receives about 11.9 cents per gallon, and Chelsea receives about 1.9 cents per gallon.
If Chelsea were to levy an additional gasoline tax, that revenue would go directly to the city.
During a special City Council work session Tuesday, Council Vice President Chris Grace said that money could help the city cover maintenance of city roads.
“At some point, we will have to consider, if we want to maintain high-quality streets, high-quality roads, high-quality bridges and safe roads and bridges, we have to find a way to pay for that, and so a gas tax makes a lot of sense because it’s a user tax,” Grace said.
“Everybody gets excited about roads; they get excited about bridges when they’re built. But what people forget about is you have to maintain those, and so we wouldn’t be good stewards as a city if we weren’t trying to think ahead and trying to figure out how are we going to maintain those facilities.”
Chelsea is growing, “so we have to think about how are we going to pay for the things that we need and how we can be responsible as leaders to take care of what we have and to plan for the future,” Grace said.
No action was taken in regard to a gasoline tax Tuesday, and no specific timeline was outlined during the work session for considering one.
The council also discussed a proposal to split the city’s 1-cent sales tax currently designated for education in half and use half the proceeds to help fund a Chelsea Police Department. But none of the three council members present at the work session (Grace, Casey Morris or Johnna Barnes) voices support for doing so.
Morris said he had zero interest in splitting the education tax. “We created that education tax to be our education tax for whatever education needs may arise one day,” he said. “That could be our library. That could be what all we’ve done at the high school.”
Grace agreed splitting the tax for a police department would be a bad idea.
“The reason we’re having this discussion is because of the discussions that we’ve been having openly about the need for public safety, getting a police department,” he said.
Morris added that the idea of forming a police department comes from county leadership. “It’s not our idea,” Morris said. “Public safety is a priority of ours, but it is not our idea to form a police department. This is something that is being required of us by our county leadership.”
In other business Tuesday, the council:
- Discussed the possibility of seeking new bids for garbage pickup services
- Discussed whether to include the Foothills Business Park in the U.S. 280 overlay district for zoning purposes or a minor overlay district
- Discussed information technology services
