In a long, uphill battle, Massachusetts will hold fast to its plan to lower total borrowing over the next several years, according to state Treasurer Joe Malone.

"We will continue to ramp down so we can get borrowing under control," Mr. Malone said at a luncheon Friday sponsored by the Municipal Analysts Group of New York. In fiscal 1992, which started July 1, Mr. Malone said total GO borrowing is estimated at only $791 million, compared with an average $900 million over the last two years.

Massachusetts has a long way to go.

According to Mr. Malone's office, the state's total tax-supported debt -- more than $1,750 per state resident -- is second only to Hawaii. Pruning the outstanding debt, Mr. Malone conceded, is going to be painful and require renewed "will-power" on the part of Massachusetts residents.

Next month, Massachusetts is scheduled to sell much of this would-be rare debt in a #375 million GO offering. The issue, partly to finance trasportation needs, has been the subject of much internal debate between Mr. Malone's and Gov. Weld's offices.

Both arms of government wanted to arrange a dedicated financing for the sale, with last year's 10 cents per gallon gasoline tax as the proposed revenue source. The plan was scuttled, however, when too many legal hurdles cropped up, according to Deputy Treasurer Chris Doherty.

There was also talk on Wall Street last week that the borrowing was no longer destined for transportation purposes. Officials in the treasurer's office Friday said there is a $273 million cap on transpotation spending for fiscal 1992, meaning the remainder will go to general expenses.

The negotiated syndicate for the sale includes Smith Barney, Harris Upham & Co.; Bear Stearns & Co.; Dillon, Read, & Co.; Lazard Freres & Co.; and Merrill Lynch Capital Markets.

Mr. Malone said he also is bent on curbing short-term state borrowing practices. He said the state aims to cut such debt sales in hald this fiscal year, to about $500 million from over $1 billion during fiscal 1991.

Much of Mr. Malone's discussion Friday was centered on cutting the Bay State's expenses. In that vein, he said Gov. Weld's well-publicized privatization efforts could reach directly into the treasurer's office by turning cash management functions over to the private sector.

"Don't tell the people in cash management," Mr. Malone said, "but we are looking at that. Northing is off the table in terms of privatization."

The state brought in outside consultants to examine privatization possibilities when Mr. Malone and Gov. Weld took office last January, and now a new round of consultants are being hired to inject a still fresher look at how to slim the state budget, Mr. Malone said. The state currently has average daily cash balances of $100 million, not including pension fund cash.

Massachusetts will even stay the cost-cutting course in the most dire municipal situation yet -- the receivership of Chelsea. "Even there the receiver is finding places where money can be saved," Mr. Malone said. "Before the blank check goes to Chelsea, there are cost savings to be made."

Mr. Malone's visit to New York included making the usual argument for a higher bond rating to Standard & Poor's Corp. and Moody's Investors Service, both which put Massachusetts in the triple-B range. Fitch Investors Service rates Massachusetts A.

The rating argument was supported by the more conservative approach to revenue estimates, debt management, and the unusual assertion that Massachusetts taxpayers are ready to tighten their belts. Linking the apparent end of the Democratic Party's "monopoly" over the state to a popular recognition that the state had become bloated, Mr. Malone said residents "have seen the light.

"People are caught up with the idea that something's got to give" in the major areas of spending, including Medicaid, he said, "and that is spreading throughout the state."

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