The federal deficit has improved significantly in the first three months of the new budget year, helped by a continued surge in tax revenues.

In its monthly budget report, the Treasury Department said Friday that the deficit from October through December totaled $80.4 billion, the smallest imbalance for the first three months of a budget year since 2002. The budget year ends Sept. 30.

Tax collections are running 8.2 percent higher than a year ago while government spending is up by just 0.7 percent from a year ago. Last year's spending totals were boosted by significant payments to help the victims of the Gulf Coast hurricanes.

The Treasury said for December, the government actually ran a surplus of $44.5 billion, the largest surplus ever recorded in December and a gain that reflected a big jump in quarterly corporate tax payments.

The $80.4 billion deficit for the first three months of the current budget year was down 32.6 percent from the imbalance for the same period a year ago of $119.4 billion.

For the year, analysts are still forecasting that the deficit will worsen from last year's total of $248.2 billion, which had been the lowest in four years.

The Congressional Budget Office is forecasting that the deficit for the 2007 budget year will rise to $286 billion, an increase of 15.2 percent from last year, but that figure could be lowered when the CBO releases its revised estimate later this month.

The Bush administration is currently even more pessimistic, predicting a deficit for 2007 of $339.2 billion, but that figure will also be revised when the administration releases its new budget request to Congress on Feb. 5.

Bush, who took office while the country was running record surpluses, saw the deficit hit an all-time high in dollar terms of $413 billion in 2004.

President Bush has said his new budget will outline a path to eliminate the deficit completely by 2012.

For the first three months of the current budget year, revenues total $573.5 billion, an increase of 8.2 percent from tax collections in the same period a year ago. Outlays totaled $653.9 billion, up 0.7 percent from a year ago.