NEW YORK (

TheStreet

) -- An increase in income tax receipts helped cut the U.S. monthly budget deficit in half this April compared to last year, the Treasury Department said on Wednesday.

The budget deficit came in at $40.5 billion for April, down from the $82.7 billion deficit in April 2010, according to the U.S. Treasury Department's monthly financial statement. Economists were expecting a $41 billion figure, according to

Briefing.com

.

In April, government spending rose to $330 billion from $328 billion in April 2010. For the first seven months of the fiscal year, government spending was up about 9% to $2.189 trillion from $1.999 trillion a year earlier.

The government reported that receipts in April rose to $289.5 billion from $245.3 billion. Individual income tax receipts were up to $155.6 billion from $107.3 billion while corporate income tax receipts saw a slight gain, coming in at $25.1 billion from $23.1 billion in the prior year.

Still, the increase in tax revenue is not nearly enough to keep the federal budget deficit from exceeding $1 trillion for a third consecutive year. The deficit remains on pace to grow by $1.4 trillion during this budget year, according to an estimate from the Congressional Budget Office.

As the May 16 deadline for the $14.294 trillion debt ceiling approaches, President Barack Obama plans to discuss the issue with lawmakers but said he won't be directly involved in any negotiations.

Congress has raised the debt ceiling 10 times in the past decade, according to

National Journal

. Now Republicans are saying they will refuse to vote to increase the borrowing limit unless the administration agrees to pass deep cuts in spending.

--

Written by Theresa McCabe in Boston

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