Benjamin Netanyahu's 2013 budget is expected to include deep cuts in some of the social programs favored by some coalition parties.
If he is unable to persuade his partners to back the budget, Netanyahu could be forced to call elections early next year instead of at the formal end of his term next October.
Threatening to call elections is an almost yearly ritual around the time the budget comes up for approval. An election campaign could sideline other key matters, including the already frozen Israeli-Palestinian peace talks and Israel's drive against Iran's suspect nuclear program.
Israeli media reported that Netanyahu would announce his decision when parliament returns from its summer recess in two weeks.
Opinion polls forecast an easy election win for Netanyahu and his mostly hard-line partners, but it's unclear where Netanyahu stands. If he opts for his government serving its full term—that would make this government the longest-lasting in Israel's history.
Political scientist Avraham Diskin said Netanyahu could be eager to stretch his term, to be able to claim the title of Israel's longest-serving government.
"He's not very interested in elections," Diskin said, "but he isn't afraid of elections."
Israeli governments rarely serve their full four-year terms, as disagreements among coalition partners usually force early elections. Netanyahu took power in March 2009 after such an early election, potentially giving him a term of four years and seven months.
Netanyahu suggested in interviews to Israeli media over the weekend that he was eager to pass a budget but would head to the polls if his coalition partners reject it. If the parliament rejects a budget, that amounts to a vote of no confidence under Israeli law, requiring the prime minister and his Cabinet to resign.
"I hope we will be able to pass a responsible budget. It depends not only on me but also on the coalition partners," Netanyahu told Israeli TV Channel 2 in an interview recorded Friday and broadcast Saturday.
Few of Netanyahu's coalition members—a mix of mostly hard-line religious and secular parties—seem interested in rushing to the polls. According to opinion polls, none would make strong gains.
According to a survey in the Haaretz newspaper last week, if elections were held now, Netanyahu's Likud Party would win 27 seats in the 120-member parliament, putting him far ahead of any other party.
Netanyahu would still need to cobble together a majority coalition.
According to the poll, he could form another government with the Jewish religious and nationalist parties currently in his coalition. The poll indicated that dovish and Arab parties now in the opposition would likely remain a minority. The poll surveyed 507 people and had a margin of error of 4.2 percentage points.
Even so, events could deter Netanyahu from rushing into an election campaign. The main effect could be to hobble his campaign against Iran.
Israel believes Iran is developing nuclear weapons. Netanyahu has repeatedly indicated Israel could attack Iran if it concludes that international sanctions and diplomatic pressure have failed.
Netanyahu last week estimated that the world has until next summer to stop Iran before it can build a nuclear bomb. Iran says its nuclear program is for peaceful purposes.
In the TV interview, Netanyahu brushed off suggestions that he might time a strike ahead of elections to give himself an electoral boost.
Similar accusations were leveled in 1981 at Prime Minister Menachem Begin, who launched a successful strike on an Iraqi nuclear reactor weeks before elections, which he went on to win.
Opinion polls have shown most Israelis would oppose a unilateral attack on Iran, favoring coordination with the U.S. instead.
An Israeli official said Netanyahu began meetings with coalition partners on Tuesday. He spoke on condition of anonymity because he was not authorized to discuss ongoing coalition deliberations with reporters.
Netanyahu met with Eli Yishai, head of the ultra-Orthodox Shas Party, which has a largely low-income constituency and is expected to oppose cuts in social spending.
"If you ask me, elections will likely be in February," Yishai told Israel Radio after his meeting.
Ofir Akunis of Netanyahu's Likud Party told Army Radio that Netanyahu has a month to decide.
"If by the end of the month we don't get a draft formula that allows the passing of a responsible budget for the year 2013, there will be no choice but to bring forward the elections," he said.