With the state on track to run out of cash next month, and perhaps forced to issue IOUs instead of tax-refund checks come spring, the only realistic proposal in Sacramento that could prevent such a train wreck is a legally untested, three-step maneuver that would have the effect of raising taxes through a majority vote of lawmakers.

The legislative scheme, which might be called the Taxes Three-Step, works like this: 1. eliminate all state taxes on gasoline, 2. raise general taxes by enough to exactly replace the money now collected through taxes on gasoline, and 3. impose 39-cent per gallon highway users’ fee on gasoline.

The net effect would be an $8.1 billion tax increase over the next 18 months — something that, if done straightforwardly, would require a two-thirds majority vote of lawmakers. But that threshold is unattainable because Republican legislators refuse to discuss a tax increase of any amount, of any kind.

Since it takes only a majority vote to lower taxes (Step 1), to reshuffle taxes as long as the shift produces no additional tax revenue (Step 2), and to impose fees (Step 3), the Democratic majority in the Legislature believes it discovered a way that it could act on its own to avert a fiscal calamity.

The Democrats passed their plan, which also included about $7 billion in spending cuts, on Dec. 18, but delayed sending the bills to the governor’s office because Gov. Arnold Schwarzenegger objected to certain details.

Democratic leaders and Schwarzenegger had been engaged in negotiations over the last two weeks, but as of Tuesday, the negotiations had stalled.

As for Republican lawmakers, they have moved on to Step 4: Sue.

All 44 GOP legislators Tuesday joined in a lawsuit filed by the Howard Jarvis Taxpayers Association alleging that the Democratic scheme violates Proposition 13’s provision requiring that “taxes enacted for the purpose of increasing revenues must be imposed by an act passed by not less than two-thirds of all members elected to each of the two houses of the Legislature.”

In announcing the lawsuit filing, Jarvis Association President Jon Coupal said: “The language is clear and unambiguous. Now we are told that, miraculously, the legislative majority has found that the language does not mean what it says.”

Democrats cite a 2003 opinion from the Legislative Counsel’s Office to defend their legal interpretation. The opinion notes that it has been a “consistent practice” for three decades to net “tax increases against tax decreases for determining the vote requirement.”

Because, they assert, their tax changes are not “for the purpose of increasing revenues,” the changes can be passed with a simple majority vote.

The proposed highway-user fee on gasoline, to be sure, is designed to raise revenue. But since the revenue could be used only for transportation projects and there is a direct nexus between transportation and gasoline consumption, the proposal perfectly meets the definition of a fee.

It is not entirely clear where Schwarzenegger stands on the question of the legality of the Democratic package.

In announcing his intent to veto it last month, Schwarzenegger indicated he would have signed the bills had they also included other provisions he asked for.

Asked whether he thought the Democrats’ maneuver was legal, Schwarzenegger punted: “To me what is important is that we raise the revenues we need.”

Tuesday, Senate President Pro Tem Darrell Steinberg and Assembly Speaker Karen Bass instructed their clerks to send the bills down to the governor’s office. They said that over the last two weeks they had agreed to 75 percent of Schwarzenegger’s requests on other issues and also signed off on an additional $1 billion in spending cuts.

Bills to reflect those concessions will be voted on this week, Bass said.

Steinberg said he thought over the weekend an agreement was at hand, but that Schwarzenegger appeared to get cold feet Monday.

“As we move closer to the governor, he appears to be shutting down,” Steinberg said. “The governor is apparently feeling some heat over his statement that he would sign a majority-vote budget.”

Is the Democrats’ majority-vote tax maneuver legal? Maybe, Maybe not.

“The courts will decide what the courts will decide,” Steinberg said. “We’re trying to solve the problem here.”

With the clock ticking toward what Schwarzenegger has warned will be a “financial Armageddon,” Steinberg said the ball is now in the governor’s court to find a politically doable solution over the next week or so.

“It’s time to take some action,” he said. “It’s time for him to consider how he intends to avert the cash crisis on Feb. 1.”

— Timm Herdt is chief of The Star state bureau. His political blog “95 percent accurate*” is at http://www.TimmHerdt.com.