updated 6/12/2006 2:28:51 PM ET 2006-06-12T18:28:51

The federal deficit through May is running well below last year’s pace, helped by strong growth in revenues, the Treasury Department reported Monday.

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Through the first eight months of the budget year, the deficit totaled $227 billion, down 16.7 percent from the same period in 2005, when the red ink totaled $272.3 billion.

The positive trend so far this year came about even though the deficit in May was up sharply from a year ago, climbing to $42.8 billion, 20.9 percent higher than the deficit in May 2005.

Analysts blamed the May deficit drop to timing issues that shifted payments for benefit programs and certain programs run by the departments of Education and Housing and Urban Development into May. Last year those payments had been made in April or June.

The $227 billion total deficit for the past eight months puts the government on track to turn in a substantially smaller deficit this year than last year, when the red ink totaled $319 billion for the full year, the third-highest amount of red ink in dollar terms. The record deficit was $413 billion set in 2004.

The Congressional Budget Office is forecasting that this year’s deficit will be around $300 billion, significantly below a previous estimate of $350 billion, reflecting significant increases in tax revenues, reflecting the strong economy.

Through the first eight months of the current budget year, which began on Oct. 1, government revenues have totaled $1.545 trillion, up 12.9 percent from a year ago.

Government spending is also up but at a slower pace, rising by 8 percent to $1.772 trillion, compared to the same eight months in the 2005 budget year.

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