Gov. Pawlenty's latest budget offer calls for funding the Central Corridor light rail line, but only if lawmakers meet several conditions.
The governor also revived his call for a cap on property tax increases. For the past few weeks, Pawlenty and DFL legislative leaders have been trading budget offers.
Their goal is to erase a $935 million projected budget deficit. Pawlenty hopes the latest offer is a pathway to a deal.
"We realize that in divided government there's going to have to be some things that they get that they can declare success on. There's some things that we need to get to do the same, in the interest of our state," said Pawlenty.
"There's going to be some things that they just simply can't agree to. There's going to be some things that I simply can't agree to. But all of these things, for all of the reasons, are within the range of the doable," he said.
Pawlenty has proposed the property tax cap in the past but Democrats have rejected it. He also wants to shift $125 million from a health care fund to balance the budget -- something DFLers also oppose.
Pawlenty is also withholding outright endorsement of state-authorized public subsidies for a Mall of America expansion, saying he wants to see the plan refined.
The megamall proposal is gaining steam at the Capitol after all four leaders of the Legislature said Tuesday they will work to get a package passed.
The $2.1 billion project carries an expectation of $371 million in public financial help.
The mall's owner is trying to divert property tax dollars generated from the expansion to pay for a parking ramp. Lawmakers are also being asked to allow Bloomington to raise sales, food and lodging taxes for the project.
But Pawlenty isn't sold on the property tax diversion and says it needs to be examined more closely.
He says it could lead to a parade of real-estate developers seeking similar treatment for their projects, such as a new Minnesota Vikings stadium.
(The Associated Press contributed to this report)