The Battle of the Budgets has begun.

Gov. Jay Inslee, a Democrat in the third month of his tenure, unveiled his $34.4 billion budget blueprint in a lengthy televised news conference at the Capitol on Thursday.

Headline: He would generate about $1.4 billion in new revenue by extending expiring taxes and by closing or reducing a variety of tax exemptions.  The new money would mostly go for education, a $1.2 billion down-payment on the state addressing a state Supreme Court mandate for full state-level funding of basic education.

The plan will collide with the no-new-taxes, GOP-dominated Senate coalition, which releases a budget soon. Inslee said he’s optimistic that a good compromise will happen. “I believe we can do hard things,” he said.

The governor’s calculation:

“To govern is to choose …. I choose education over tax breaks. … I’m betting on the future here.”

Secretary of State Kim Wyman complimented the governor for restoring support for the Washington State Library, erasing a $2.6 million deficit in the budget plan submitted by Gov. Chris Gregoire before she left office in January.

The new proposal, like Gregoire’s, would shift the Library out of the main General Fund, into the Heritage Center account, but Inslee doesn’t presume a Library cut of over $600,000 and doesn’t presume passage of a $2 million fee increase that Gregoire had proposed but that looks DOA in the Legislature.

In short, Inslee fully funds the Library, which Wyman called “great news after a decade of severe budget cuts.” The Library serves not only the Legislature and Hill staffers, but also patrons across the state and local libraries across Washington, she said.  The Library also provides crucial services to blind and reading-impaired people, to inmates and to mental hospitals.

Inslee also would:

• Restore the 3 percent salary cuts for public employees, starting in the new budget, which takes effect in July.
• Expand state participation in the Medicaid program, saving the state treasury in the near-term.
• Partially bail out the state’s financially reeled parks system, with a $24 million appropriation.
• Allow UW and WSU to boost tuition by 5 percent per year and the other four-year schools by 3 percent. Tuition at community and technical colleges would be frozen at current levels.
• Education increases would include expansion of full-day kindergarten, class-size reduction, extra pay for newer teachers, school books and supplies, and more.
• Extend expiring tax hikes on beer and professional services.  Inslee would eliminate or reduce a number of tax preferences.

Under repeated press questioning, Inslee insisted that his revenue package does not violate his campaign stance against tax hikes.  He said he has always supported closing tax loopholes to pay for education improvements, and that the tax extensions do not create a new tax, but rather continues taxes that people have gotten used to paying.

Inslee’s is the first draft to hit the decks since the session began in January. Next step is for the Republican-led Senate coalition to release a budget, likely sometime next week. Their leaders have nixed tax extensions or increases and say efforts to close tax exemptions never seem to pass in Olympia. The Democratic-controlled House then follows with yet a third alternative budget, one likely balanced with new revenue.

After both houses pass their own version, negotiators will hammer out a compromise to send to Inslee.  The regular 105-day session must adjourn by April 28. The governor will be asked to call a special session of up to 30 days if lawmakers can’t reach agreement before time expires.