DALLAS -- The Texas Treasury expects to sell a record cash-flow borrowing in fiscal 1993, beginning with a $1 billion-plus competitive note sale next month.

Deputy Treasurer John Bell said that while exact details are not yet final, the state expects to surpass its record $1.25 billion borrowing sold in fiscal 1987.

"Our borrowing is totally for cash flow, not for the budget," he said.

Tentatively, the treasury expects an Aug. 20 sale of tax and revenue anticipation notes to exceed $1 billion. The state is also expected to again use commercial paper for part of its short-term borrowings, but the total size of the cash-flow needs has not yet been calculated.

Last year, the state sold $300 million of Trans and $300 million of commercial paper for its cashflow needs. Texas Treasurer Kay Bailey Hutchison has estimated that the commercial paper saved the state as much as $5 million over the traditional practice of inter-fund borrowing.

So far, Texas officials have said the state budget will be in balance when it finishes its two-year cycle on Aug. 31, 1993. They are projecting a deficit, however, of up to $6 billion in fiscal years 1994 and 1995.

"It doesn't generally raise any red flags," said George Leung, vice president and managing director for state ratings at Moody's Investors Service. "So long as it's cash management, it reflects the lack of synchronization between the receipts coming in and going out."

Officials at Standard & Poor's Corp. could not be reached for comment.

The short-term borrowing will probably set a record because of a realignment of payment dates for the state's franchise tax on business, to mid-May from March 15 this year.

That realignment also affects when the state feels the cash-flow pinch, "Our deep hole used to be in the first week of January," said Mr. Bell. "Now it comes in May."

As a result, the state expects to end this fiscal year with a cash balance of between $200 million and $300 million, down from about $1.4 billion a year earlier.

In preparing for the competitive sale, the treasury has hired cobond counsel Fulbright & Jaworski of Houston and Walker & Satterwaite of Dallas. The firms will be paid $40,000 and expenses and $10,000 in fees, respectively.

Mr. Bell said the treasury had also named Artemis Capital Group of California and Estrada, Hinojosa & Co. of Dallas as its financial adviser for a joint fee of $22,500 and expenses.

Texas can expect favorable interest rates for its notes, which have traditionally carried the top ratings from Standard & Poor's and Moody's.

Mr. Bell said the finance team is still studying how to structure the notes. But with rates expected to be below 3%, he said, the state may use 12-month notes for all of its borrowings.

"If we get a good rate, and I think we will, it makes sense to go to the end of the biennium," he said.

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