By Kate Davidson 

WASHINGTON -- The federal deficit more than tripled in the first 10 months of the fiscal year, as government spending to combat the coronavirus continued to outpace federal tax collection, the Treasury Department said Wednesday.

The U.S. budget gap totaled $2.8 trillion from October through July, 224% bigger than the $867 billion gap during the same period a year earlier. The government has spent $5.6 trillion so far in the fiscal year that ends Sept. 30, 51% more than a year earlier, fueled in large part by the economic relief legislation Congress enacted in March to keep households and businesses afloat during the pandemic.

Total receipts for the fiscal year are down just 1%, totaling $2.8 trillion, thanks to an influx of revenue last month as individuals and corporations made tax payments that the government had delayed in April and June. Those figures mostly reflect revenue based on income and business activity from before the pandemic, and are likely to shrink in the months ahead as the economy slowly emerges from a deep downturn that led to widespread business closures and millions of layoffs.

Federal spending has soared after Congress approved trillions in economic relief measures, including enhanced unemployment benefits, stimulus checks for households and emergency small-business loans. That spending began to taper off last month: Outlays totaled $626 billion, 70% more than July 2019 but about half of what they were in June, when the government issued billions in emergency loans to small businesses.

Higher spending on jobless benefits, health care, stimulus checks and aid for state and local governments drove the increases last month.

Over the 12 months that ended in July, deficits as a share of gross domestic product totaled 15.1%, the highest 12-month shortfall since February 2010, when the deficit-to-GDP ratio was 10.1%.

Talks over another major aid package have stalled on Capitol Hill, in part over concerns from some Republicans about rising red ink. Deficits typically rise during recessions, as spending on safety-net programs like jobless benefits and food assistance increases, while unemployment weighs on tax revenue.

The U.S. budget gap was already widening in the years leading up to the coronavirus pandemic, following 2017 tax cuts that constrained revenues and two bipartisan budget deals that boosted federal spending.

The latest deficit figures are in line with earlier estimates from the Congressional Budget Office, which has projected the annual deficit could total $3.7 trillion in the fiscal year that ends Sept. 30.

Swelling deficits have led to a surge in government borrowing. The Treasury Department said last week it expects to borrow $4.5 trillion in the fiscal year that ends Sept. 30, more than triple last year's $1.28 trillion.

Write to Kate Davidson at kate.davidson@wsj.com

(END) Dow Jones Newswires

August 12, 2020 15:40 ET (19:40 GMT)