Texas plans to issue about $650 million of debt in third quarter.

DALLAS - Buoyed by a rapid prison construction program, Texas state agencies and universities are expected to issue more than $650 million of bonds and commercial paper for the third quarter of fiscal 1994, according to Bond Review Board figures.

Most of the issues are new-money bonds or commercial paper and will be used for land purchase or housing loans for veterans and university student loans as well as prisons, figures in a state quarterly report show.

"We probably are heading for one of the highest years [for new-money issues] mainly because of the prison bonds," the board's executive director, Albert Bacarisse, said.

In its annual report released last fall, the board said state agencies and universities expected to issue about $1.9 billion of new-money bonds for fiscal 1994, the highest amount since 1986. A total of $2.3 billion of debt, including refunding issues, was predicted for the fiscal year, which ends Aug. 31.

Bacarisse said, however, that it is too early to tell whether the predictions will be realized because some bond issues have been delayed into the next quarter or fiscal year.

For the fiscal third quarter, which ends May 31, the largest issue was $317.23 million general obligation bonds sold by the Texas Public Finance Authority to help finance both an ongoing and emergency prison construction program.

The authority's general counsel, Sandra Hauser, said the state agency is issuing debt for the Texas department of criminal justice as rapidly as it can under authorizations approved by voters and the state legislature.

The department is working on an aggressive prison expansion program to relieve overcrowding at county jails and to keep violent offenders behind bars longer. It plans to add another 70,000 beds in two years, roughly doubling the system's capacity. An emergency prison spending plan was approved by state leaders earlier this year.

"They will ask for as much money as they can get and spend it as fast as they can," Hauser said.

In July, the public finance authority plans to issue $143.1 million of fixed-rate general obligation bonds for prisons, Hauser said. The issue is expected to be sold competitively and will be the last for prisons in this fiscal year.

If the sale goes through this summer, more than $825 million of general obligation bonds or commercial paper will have been issued for prisons in fiscal 1994.

Besides the authority's issuance of prison debt, other state-level bond and commercial paper sales for the fiscal third quarter include:

* $135 million of general obligation debt issued by the Veterans Land Board to refund housing assistance bonds in April;

* $35 million of GO debt issued by the Veterans Land Board in March for housing loans and $35 million being issued this month by the board for land purchase loans;

* $50 million by the Texas A&M University System for various construction projects.

* $75 million by the Texas Higher Education Coordinating Board for student loans.

Bond issues totaling more than $150 million were delayed until the next quarter, Bond Review Board officials said.

Delayed sales include a $32.6 million general obligation bond issue by the Texas Public Finance Authority, now scheduled for June instead of April, and a $101 million single-family housing bond refunding issue by the Texas department of housing and community affairs. This issue could be delayed until next fall, officials said.

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