CHARLESTON, W.Va. -- Gov. Earl Ray Tomblin submitted legislation Tuesday to provide the final piece of the puzzle to pay down the state's massive liability for future health-care benefits for retired state and public school employees, also known as the OPEB liability.

Plans are to pass the legislation (SB469) and get it back to the governor for his signature as quickly as possible, which could be by the end of the week.

"We're going to get it behind us, hopefully this week," Senate Finance Chairman Roman Prezioso, D-Marion, said of the legislation, which advanced from the Senate Finance Committee to the full Senate Tuesday afternoon.

The plan would take $35 million a year of personal income tax collections that currently are set aside to pay down long-standing deficits in the former state-run workers' compensation program, debts that will be paid off by 2016.

Under the proposal, $30 million a year would go to into a fund to pay down the remaining $5 billion of long-term OPEB liability.

Another $5 million a year would go into a trust fund to assist employees hired after July 1, 2010.

State and public school employees hired after that date will not be eligible for state-subsidized retiree health-care coverage. Pre-Medicare retirees could obtain PEIA coverage, but would have to pay the full premium amount, which would be too expensive for most retirees.

Tomblin's bill does not spell out how the Retiree Health Care Trust Fund would be administered, but mandates the legislative Select Committee on Other Post Employment Benefits to work with the PEIA Finance Board to develop a plan.

In December, the PEIA Finance Board voted to cap state contributions to retiree premiums at current levels, with no more than 3 percent annual increases.

That action effectively reduced the state's long-term OPEB liability from more than $10 billion to a manageable $5 billion -- although it will also eventually make retiree premiums unaffordable for state and public school employees who were hired before July 1, 2010.

Prezioso said the governor's bill is similar to a proposal that passed the Senate last year, but died on the final day of the regular session over an impasse when House leadership pushed to raid the state's Rainy Day emergency reserve funds to pay down the liability.

"This is one of the issues we have to address," Prezioso said of the governor's plan to pay down the OPEB liability.

He said the Legislature needs to quickly resolve OPEB in order to begin work on the state's next big funding hurdle: soaring state expenditures for Medicaid, the state-managed health plan for the poor, elderly and disabled.

Tomblin's proposed 2012-13 budget uses about $109 million of surplus revenue to help fund Medicaid, but Medicaid costs will be a major factor in a projected $389 million budget shortfall the following year.

"Next year, we're going to have to dig deep and maybe have to make some tough decisions," Prezioso said.

Also Tuesday in the Finance Committee, Senate Majority Leader John Unger, D-Berkeley, called for drug testing of recipients of Temporary Aid to Needy Families and other public assistance -- not to cut off their benefits, he said, but to get them into drug treatment programs.

"I'm saying, testing and offer treatment," Unger said. "You've got to offer someone an alternative. You can't just test them and cut them off if they test positive."

He said the public is becoming increasingly fed up with people abusing public assistance programs.

Reach Phil Kabler at ph...@wvgazette.com or 304-348-1220.