DALLAS -- Even as interest rates plunged, the Texas treasury earned $23 million more in 1991 than the previous year by aggressively investing the state's funds.

Treasurer Kay Bailey Hutchison yesterday said the state earned an average yield of 7.29% on its $4.79 billion portfolio, netting the state $340.2 million in 1991. That was up $23 million from interest earnings in 1990.

Mrs. Hutchison said Deputy Treasurer Linda Patterson kept the average yield higher by aggressively trading the state's portfolio of government securities and about 12% triple-A commercial paper.

"She has really traded the portfolio," Mrs. Hutchison said. "Rather than buy and hold, she buys and trades."

At the same time, a treasury-managed investment fund for local government, known as Tex. Pool, earned an average yield of 6.28%. She said the return was lower because the fund required more liquidity.

At the end of the year, Tex Pool had earned $481 million for local government. That is up $100 million from the 1990 totals because of aggressive investing and the near tripling of the fund's principal from $1 billion in January to $2.6 billion this week.

The $340.2 million earned on state investments was part of a record $1 billion in revenue collected by the Texas treasury in 1991 that includes cigarette and tobacco taxes.

Mrs. Hutchison said the total collections exceeded earlier projections by $150 million, adding, "That's $150 million that won't have to be raised in taxes."

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