Natural gas drilling was at a seven-year low in North Texas at the end of 2011.
The number of active Barnett Shale drilling rigs had fallen to 53, one-fourth of the peak count in 2008, and Oklahoma City-based Chesapeake Energy, the second most active company in the Barnett Shale, announced in January it would cut its drilling activity in half in North Texas.
That move was a result of decade-low prices for natural gas, giving Chesapeake less profits.
In Johnson County, the decline of gas drilling activity is leading to a substantial decrease in gas royalties cities are receiving.
Alvarado City Council voted in 2007 to use 50 percent of gas drilling revenue the city received for repairing streets, with the rest of the funds to go toward small, one-time purchases, such as vehicles for the police and fire departments, renting equipment and helping fund the new animal shelter, said city finance director Kelle Whitfill.
Some of that is still in reserves.
“We try to maintain some of that in reserves, but with the economy being bad, it's nice to have that extra income for projects,” Whitfill said.
Alvarado has received more than $359,000 so far in 2012. It received more than $1.14 million last year, but it received no more than about $590,000 in previous years.
The decline in royalties has been significant, Whitfill said, but that shouldn't have a huge impact on the city.
“We've only used it for one-time things,” she
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said. “It's not going to impact our budget, it'll impact our projects. It's been nice doing small things we need. It'll impact what we can do and how many streets we can repair,” she said.
In Burleson, royalties are down to an estimated $1 million in 2012. Just four years ago, the city saw a high of $6.3 million in royalties on city-owned property.
Keene has received just more than $13,000 this year in royalties, compared to a high of about $83,000 in 2008.
“It's down probably 80 percent,” Keene finance director Peggy Thompson said. “We don't expect a whole lot more to come in.”
Those figures aren't unusual. But what city officials say is that the decline isn't hitting them hard. Many area cities have saved gas drilling royalty revenue in reserves, and other have simply used the funds for one-time expenses. Their budgets, they say, won't be affected.
Other Johnson County cities have been conservative with their Barnett Shale funds.
The city of Burleson has funded various parks projects with gas drilling money, but it hasn't adopted those funds into the budget.
“The majority of the money from gas well revenue goes to our parks [department] and to subsidize the debt service to keep the tax rate down,” said Sally Ellertson, the city's public information officer. 
Parks projects include Warren Park, Mistletoe Hill Park, Bailey Lake, Meadowcrest Park, Elk Ridge Park, Prairie Timber Park, Burleson Meadows (now named Centennial Park), Village Creek Trail and Hidden Creek Golf Course.
Burleson's director of finance Rhett Clark said there should be no impact on the tax rate even as the city uses gas drilling funds to support the debt service.
“We anticipate that the combined effects of increasing appraised values and declining debt service will enable us to hold the line on the debt service tax rate if we don't get any more gas revenue,” he said. “No gas revenue has been used for operations, so the declining royalties should have no impact on the maintenance and operations portion of the tax rate.”
Joshua has not received any royalties and only received $2,000 in bonuses which has been added to the general fund.
Keene, like neighboring cities, has also been cautious. The city's royalty revenues have gone in the city's reserve funds.
“We don't want to be dependent on it,” Thompson said.
The city has not received any gas drilling permits this year, Thompson said. Permits allow companies to drill new gas wells, which could in turn produce the gas that would give a city royalties.
“We budgeted for [one] gas well permit this year, but we have not received any,” she said.
Keene received four permits in 2011, four in 2010, two in 2009 and three in 2008. By comparison, Burleson issued a high of 18 permits in 2008 and just one in 2011.
Cities have also received other funds from gas drilling.
Burleson has also taken in approximately $4.4 million from the gas companies from the sale of drinking water since fiscal year 2005-06, according to information from Burleson director of finance Rhett Clark. That money goes into the utility fund to support those operations.
The city has received more than $32,000 from the sale of pond water from Bailey Lake which has gone to support park improvements, just like royalty funds.
Even as a decline in royalties is noticeable, projects for those cities that are spending gas drilling revenue should continue as long as funds are available. Burleson can still expect to work on some projects in the future, Clark said.
“Any money we get that isn't spent goes into ‘reserves,'” he said. “This money is not going into general fund reserves, though. It will still be used for the prescribed purposes at some future date.”