The New Hampshire Supreme Court on Thursday put a dent in the state budget by rejecting the state's claim to $110 million in surplus from a fund that underwrites medical malpractice insurance.

In a 3-2 decision, the court upheld policyholders' claim they had a constitutionally protected contractual right to the money. The court said the state could not change its law to apply retrospectively to contracts with policyholders.

"I'm disappointed. I thought it was going to be a close call to begin with," said Gov. John Lynch. "We'll manage through it."

Lynch said the decision means the state will have to find $45 million over the next 17 months. He was not specific on what he will do.

Republicans, who are in the minority in the Legislature, have repeatedly called the state's claim an attempt to "steal" money from doctors and health care providers.