LITTLE ROCK — More than three years after the state wildlife agency received nearly $30 million to lease thousands of acres of state lands for natural gas drilling, most of the windfall has been spent or obligated but the wells still are not producing.

LITTLE ROCK — More than three years after the state wildlife agency received nearly $30 million to lease thousands of acres of state lands for natural gas drilling, most of the windfall has been spent or obligated but the wells still are not producing.

Officials of the state Game and Fish Commission said last week they’re not sure when they will begin seeing any royalties from wells in the wildlife management area lands the agency controls.

“It has been slow in coming,” Assistant Game and Fish Director Mike Armstrong said.

Last fiscal year, the commission received about $309,000 in natural gas royalties. None was from any producing wells on wildlife management land, Armstrong said, but from the agency’s share of royalties from drilling on land in nearby sections.

“That’s not a small amount, but not the windfall that people thought it was going to be and were predicting,” Armstrong said, attributing the shortfall to a significant drop in natural gas prices in recent years.

“Gas prices will likely increase within the decade or so,” he added.

In 2008, the commission reached a $29.5 million agreement with Oklahoma-based Chesapeake Energy, then the second-largest player in the Fayetteville Shale play, for the lease of 11,500 acres in the Gulf Mountain Wildlife Management Area in Van Buren County and the Petit Jean River WMA in Yell County.

In 2011, Chesapeake sold its natural gas assets in Arkansas to BHP Billiton Limited of Australia for $4.75 billion.

Armstrong said last week that the commission “has made a concerted decision not to use the revenue stream from (gas royalties) for maintenance and operations because it’s not dependable.”

“As these wells typically go, you get the biggest amount of the royalties during the first few years of operation and then they tend to tail off,” he said. “It is not a long-term funding source at all, but it is an infusion of cash that allows us to do things that we’d ordinarily be unable to do.”

As for the nearly $30 million windfall from the gas leases, Armstrong said the commission in 2011 finalized a “spending plan” for the funds.

The plan includes, among other things, retiring more than $12 million in debt from land purchases; spending $5 million for infrastructure repairs, renovation and maintenance projects across the state; and $4 million for the Bayou Meto irrigation project.

The plan also calls for spending $3 million to help implement part of the White River minimum flow project; another $3 million for conservation and education programs approved by the Legislature in 2011; devoting $1 million to the Arkansas Department of Environmental Quality to hire additional inspectors; and using about $1 million for the purchase of Choctaw Island Wildlife Management Area.

The commission’s use of the money has been challenged in court and debated by the Legislature for years.

Lawmakers in 2007 proposed a constitutional amendment to require fees, monies or funds related to oil, gas or other minerals in and under lands owned by the commission be considered general revenue. The measure failed in committee.

The commission had to wait until mid-2011 to begin obligating and spending the money because of a lawsuit that sought to divert the windfall to the state’s general revenues. The plaintiff, James Dockery of Little Rock, argued the money would possibly be needed someday to repair damage caused by drilling operations.

A Pulaski County circuit judge dismissed the lawsuit, and the state Supreme Court affirmed the ruling in March.

Last week, Attorney General Dustin McDaniel denied certification to a proposed constitutional amendment that would reduce the state conservation sales tax from 1/8-cent to 1/14-cent and remove Game and Fish from the list of agencies receiving the tax revenue because the agency receives natural gas royalties.

“They have enough money and we’ve got enough taxes,” said Jimmy White of Manila, chairman of Sportsmen 2010 and sponsor of the proposed ballot initiative.

The 1/8-cent conservation tax, approved as Amendment 75 by voters in 1996, generates about $61 million annually, said John Theis, assistant revenue commissioner for the state Department of Finance and Administration.

The commission receives 45 percent of the revenue, about $25 million annually, as does the Arkansas state parks. The Arkansas Heritage Commission receives 9 percent and 1 percent goes to the Keep Arkansas Beautiful Commission.

Reducing the 1/8-cent tax to 1/14-cent would drop collections to about $35 million annually, Theis said.

Under White’s proposed constitutional amendment, Arkansas state parks would receive 82 percent of the tax revenue, Arkansas Heritage Commission 16 percent and Keep Arkansas Beautiful Commission 2 percent.

“They would get theirs, actually a few dollars more every year,” White said.

Removing Game and Fish from the conservation tax would be devastating, Armstrong said, because the proceeds represent about one-third of the agency’s funding while natural gas revenue is unpredictable.

“We feel like … Amendment 75 is a fantastic model for fish and wildlife conservation in the state,” he said.

White said he would resubmit is proposal to the attorney general for certification, a prerequisite for gathering signatures on petitions to qualify for the 2012 general election ballot.