NO REST FOR UNIVERSITY SYSTEM: The University System of New Hampshire incurred one of the Legislature’s biggest budget cuts last session when lawmakers slashed $90 million from Gov. John Lynch’s proposed budget.

This week, system officials will have to fend off an attempt to abolish the Chancellor’s Office, whose responsibilities and duties would be turned over to the system’s board of trustees and the presidents of the four colleges.

House Bill 1692 would also reduce the number of student trustees on the board from two to one and the number of alumni representatives from four to one.

The bill has some heavy hitters as sponsors, including House Speaker William O’Brien, House Majority Leader D.J. Bettencourt, House Finance Chairman Ken Weyler and former House Speaker and current Speaker Pro Tem Gene Chandler.

On Thursday, the bill’s prime sponsor, Rep. Robbie Parsons, met with Weyler and university system trustees and officials. Weyler said education officials obviously did not like the bill and asked that it be slowed down.

“They realize the Legislature is looking at them as not making the effort we think they should,” Weyler said.

The bill’s fiscal note indicates abolishing the Chancellor’s Office would increase expenditures by about $12.25 million a year for three years because each college would have to replicate services and duties currently centralized in the Chancellor’s Office. And the note indicates the different colleges will lose the economies of scale that the centralized office provides.

Weyler said the Chancellor’s Office is not a real efficient operation at a time when lawmakers are asking state departments to make significant sacrifices.

“They need to become more efficient,” Weyler said. “The Chancellor’s Office is a long way from its original intent.”

The office was established in the early 1970s to purchase goods and services jointly and to oversee various programs throughout the three colleges to prevent overlapping.

The office grew to more than 100 employees at one time and currently has 71 employees.

“I expect we’ll meet somewhere in between,” Weyler said. “We’ll have to wait and see what transpires in the future.”

The public hearing on HB 1692 is scheduled for 10 a.m. Wednesday before the House Education Committee in Room 207 of the Legislative Office Building.

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WHAT SURPLUS?: When is a surplus not really a surplus? It’s not really a surplus until the state issues its Comprehensive Annual Financial Report, which is the official, audited report on the state’s finances for the previous fiscal year.

Usually the report is issued in December, but not this year, and now it will not be available until the end of February.

The Joint Fiscal Committee of the General Court voted without debate or discussion Friday to extend the deadline for the report until the end of February. Earlier this year, the committee had extended the deadline to Jan. 20.

What’s holding it up? Possible tax rebates for the state’s hospitals, about $65 million in rebate requests.

In the current biennial budget, passed last June, lawmakers did away with the Disproportionate Share Program to large hospitals. The program helped hospitals with the cost of medical care for patients who could not pay their bills.

Eliminating the program and other Medicaid adjustments cut a total of $250 million over the biennium that once went to hospitals.

Soon after the budget was approved, some of the hospitals filed the rebate requests after talking with federal Medicaid officials about the method the state used to reimburse them for services.

The hospitals also reduced their Medicaid Enhancement Tax liability by about $41.1 million, leaving the state below revenue projections this fiscal year.

The long and complicated fight is about to come to a resolution, but the Department of Revenue Administration needs more time to settle the rebate requests and does not expect to be finished until mid-February. After the DRA is done, the auditors can do a final review and determine whether the state actually has the $26 million surplus Gov. Lynch announced last fall.

Lawmakers already have their eye on the money. O’Brien last week backed a bill from Bedford Rep. Keith Murphy to put the $26 million surplus in the state’s Rainy Day Fund.

Lawmakers are likely to hold off on that bill until the official surplus is known.

The final financial numbers for the 2011 fiscal year are also needed by Wall Street rating agencies before the state can issue bonds.

This is not the first time the state’s annual financial report has been delayed. Several years ago, the delay was even longer as auditors tried to unravel jumbled bookkeeping at the Department of Transportation.

The 2006 fiscal year audit was not released until April 2007.

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BAD ON TOBACCO: For the ninth consecutive year, New Hampshire received a failing grade in its efforts to protect residents from tobacco-related disease, according to the American Lung Association’s annual report.

The report monitors progress on four policies: tobacco prevention and control programs, smoke-free air laws; cigarette tax rates; and stop-smoking treatment and services.

The state received an F for prevention and control programs because it provides no state money, only federal.

The report was slightly better for smoke-free air, with the state receiving a D. The state restricts smoking in most public places, but has few prohibitions.

New Hampshire did receive a C for its tobacco tax, which has been raised significantly in the last decade, but lost points because the tax was reduced by 10 cents last year.

And the state received an F for stop-smoking programs because there are no mandates on private insurers to cover them.

The organization estimates the state loses $887 million in economic costs every year due to smoking.

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TAX BREAK OVER? Along with the Medicaid Enhancement Tax shortfall, the tobacco tax has consistently been below projections this fiscal year.

Proponents of the tax cut said it should be neutral because it would spur cigarette sales along the borders with surrounding states.

Instead, the sales have been off, and revenues are $13.2 million below last year’s at this time, or down about 10.5 percent. The levy is $8.5 million below projections for the year.

Senate Minority Leader Sylvia Larsen, a Democrat from Concord, wants to do something about it. House Bill 2, which contained the tobacco tax reduction, included a contingency clause that would return the rate to $1.78 a pack in August 2013 if revenue projections were not met.

Larsen asked and received the Senate Internal Affairs Committee’s approval to introduce a late bill to return the tax to the $1.78 level in March.

“It is a mistake to ask every citizen of our state to make sacrifices given the current budget while we offer giveaways to big tobacco companies that provide no actual tax relief to New Hampshire citizens and businesses,” Larsen said. “It’s fiscally irresponsible, morally questionable and just doesn’t make sense.”

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LIKELY VETO: Anti-abortion groups celebrated state representatives’ passage of House Bill 228, which would prohibit any organization that performs elective abortions, such as Planned Parenthood of Northern New England and some hospitals, from receiving any state or federal funds.

The bill passed the House on a 207-147 vote Tuesday, rejecting the Health, Human Services and Elderly Affairs Committee’s 12-5 recommendation to kill the bill.

The bill now goes to the Senate for action, where it faces an unknown fate.

Whatever the Senate does may not matter because it is likely Lynch will veto the bill if it gets to his desk.

The bill would prohibit Planned Parenthood of Northern New England from state funding unless it created an affiliate that provided only reproductive health care services. The bill would also prohibit the state’s largest hospitals — including Dartmouth-Hitchcock Medical Center, Elliot Hospital, Southern New Hampshire Medical Center and Concord Hospital — from receiving state contracts.

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PROTECTING ITS 0WN: Last year, the family of Cornish author J.D. Salinger asked lawmakers to pass legislation that would allow them to control the commercial use of his identity.

Senate Bill 175 quickly spurred battles among the professional sports players unions, the video-gaming industry and the cable and wireless industries.

The crux of the issue is the use of real people or likenesses in videos or games, not as the star but in the background.

The Senate held on to the bill and worked on a compromise. Wednesday, the full Senate will vote on it.

The bill would make a person’s identity a property right that could be transferred during the person’s life or for 70 years after the person died.

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PACS WAR: The National Organization for Marriage said it will spend $250,000 in legislative races to help lawmakers who support HB 437, which would repeal the state’s gay marriage law.

The organization said it would hold lawmakers accountable and described itself as a significant player in New Hampshire, spending more than $1 million in the last election.

Several weeks ago, the New Hampshire Republicans for Freedom and Equality PAC, which backs the state’s two-year-old law, announced it would spend $100,000 supporting representatives who vote to kill HB 437.

The House could vote on the bill as early as Feb. 1, but it may not come up before crossover, which is March 29.

Garry Rayno writes State House Dome weekly for New Hampshire Sunday News. E-mail him at grayno@unionleader.com.