DALLAS -- This September Texas is set to sell $1 billion in tax and revenue anticipation notes, a near record for the state.

State Treasurer Kay Bailey Hutchison said yesterday that the note sale was the first part of $1.5 billion in cash management notes the state expects to sell for the two-year fiscal period that begins Sept. 1.

The remaining $500 million will likely be sold in fiscal 1993 to help the state maintain steady cash balances in its accounts.

She also said the state expects to close fiscal 1991 this month with a $700 million cash balance, nearly double earlier estimates.

The note program, which is expected to be sold competitively late next month, is necessary because much of the $2.5 billion in new tax and fee increases passed last week will not take effect until fiscal 1993.

Lawmakers last week approved a $59.1 billion budget at the end of a 30-day special session. The spending plan covers fiscal years 1992 and 1993.

"The economy is strong and the size of the program is no reflection on the condition of the state," she said in an interview. "The tax bill that was just passed is going to be heavy into the second year."

In fact, she estimated that the state will realize as little as 25% of the projected new revenues during the next 12 months, which has spurred the needed for larger cash flow borrowing.

Mrs. Hutchison cited a revamping of the state's franchise tax on business and revenues from a proposed new lottery as reasons why the state does not expect many of the revenues to be available until fiscal 1993.

Texas voters will decide Nov. 5 whether to authorize a lottery.

Treasury officials had earlier projected a $500 million borrowing might be necessary. The largest note program ever done by Texas was a $1.25 billion sale in 1987.

"At this point we plan to sell the $1 billion at one time," she said.

The state's Cash Management Note Committee late yesterday approved the sale, with the provisions that the treasury can sell the note deal negotiated if it is beneficial for Texas.

Dallas-based Rauscher, Pierce, Refsnes Inc. is the financial adviser for the transaction and Vinson & Elkins is the bond counsel.

Advisers have said they expect the 12-month notes to be sold with rating of MIG-1 from Moody's Investors Service and SP1-plus from Standard & Poor's Corp. They will be secured by a pledge of revenues to the state's general fund.

"We expect a very competitive rate," said Mrs. Hutchison.

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