Revenue primarily from the inheritance tax is chipping away at a stubborn state budget deficit, State Comptroller Kevin Lembo said Monday.

In a letter to Gov. Dannel P. Malloy, Lembo is projecting a $91.3 million budget deficit this year — a $40 million improvement over his projections for February.

Lembo expressed confidence for the first time Monday that “it’s possible the deficit could be eliminated entirely.”

He said the reduced deficit projection is almost entirely driven by revenue and primarily is attributable to a $30-million gain in inheritance tax collections. But increases in enrollment in the Medicaid system still seem to control where the state will end up on June. 30.

“Unanticipated increases in Medicaid caseload numbers throughout the year have produced most of the spending in excess of original budget projections,” Lembo wrote in his monthly letter to Malloy.

Office of Policy and Management Secretary Ben Barnes was even more optimistic earlier this month when he predicted the state would end the year with a $33.6 million deficit. There’s still a $57.7 million deficit between his projection and Lembo’s. Lembo is still not as confident as the governor’s budget director in the direction of state spending, which explains most of the difference in their numbers.

But Lembo gave the Malloy administration credit for trying to hold down spending.

“It should be noted that both the actual expenditure growth trend through February, and the OPM (Office of Policy and Management) spending target, represent historically low rates of General Fund spending growth,” Lembo said in a press release. “This low growth in spending has also helped to mitigate the Fiscal Year 2013 deficit.”

About 65 percent of all state spending for the year occurs by the end of February.

On the revenue side, the difference between Lembo and the administration is small.

“My revenue difference from OPM is relatively small and is driven by a generally improving collections outlook as I look at March receipts. Connecticut’s economy is showing signs of a moderate but steady recovery,” Lembo wrote. “The state added 700 jobs to payroll during the first two months of 2013. The unemployment rate in February was 8 percent down from 8.2 percent at the close of 2012.”