The “alternative” budget proposed today by Assembly Democrats held few surprises… except for what seems like a pliable position on new taxes.

Assembly Speaker Fabian Nunez and Assembly Budget Chairman John Laird unveiled the Democratic budget at a local school here in Sacramento, the same school where Governor Schwarzenegger announced his now infamous deal on education funding in 2004.

The bulletpoints of the Democratic budget: agreement with Schwarzenegger to boost transportation funding while cutting CalWORKS grants and cost-of-living increases for SSI recipients… no new cuts in salary for state workers, and no attempts to shift the state’s portion of teacher retirement contributions to local schools.

And although the document handed out to reporters didn’t reflect a full restoration of the disputed Prop 98 funding for schools, Democrats say they will push to do just that.

So what are they willing to do to pay for it? It depends.

Nunez said his party’s intention is to reinstate the top tax brackets that existed under former governors Ronald Reagan and Pete Wilson. That would raise, they say, about $2.6 billion in extra revenue next year and about $1.3 billion in the years after that. And Nunez said that money was essential to meeting the promise made for school funding.

But at the same time, the Speaker said if Republicans wouldn’t go for the tax hike, then he’d advocate borrowing more money from the Prop 57 deficit bonds. That, however, would probably only be a one-time fix. And Assemblymember Rick Keene, the GOP budget point-man, says that would only increase deficit pressures in years to come.

Still, Democrats seem ready to make this, as Nunez said today, a debate about having “the courage to do the right thing.”

Budget negotiations among Democrats and the Republicans in the Legislature are expected to begin in earnest tomorrow.