Treasurer: Illinois Investment Funds Remain Safe

(With additional reporting from The Associated Press)

As lawmakers in Washington scramble to vote on a debt ceiling compromise, Illinois Treasurer Dan Rutherford says he is keeping a close eye on the state's finances.

Rutherford said rising interest rates are helping the state earn more than expected in investments.

President Barack Obama and Congress reached a tentative deal Sunday. The Senate and House still need to vote on a plan by August 2nd, or risk defaulting on its loan obligations.

Rutherford said Monday the state earned $22,000 in interest more than typical for such a trading day. The Republican noted that interest rates have been increasing since early last week amid concerns about the debt-ceiling debate in Washington.

Rutherford said the state will have about $7 billion to invest over the next month.

"The worst case scenario is we would move that $7 billion into zero interest, meaning we gain no interest, but it would be FDIC secured," he said.

Rutherford said if if the debt ceiling isn't raised in time, he is ready to move the state's investment portfolio to 'no interest' accounts. Doing so he said could ensure that the General Assembly has the funds it needs for certain programs.

"The General Assembly has appropriated moneys, and whatever cash they have is what they use to pay the bills," Rutherford said. "Where we come in at is making sure it's secure and that if we can draw additional interest. We have benefit to try to add more into the treasury because of those interests."

Rutherford's staff had about $3 billion that was liquid and available for investment Monday, including $1 billion from the state's portfolio. He joined his investment staff for trading Monday morning.

Rutherford said Illinois is getting about a 50 percent reduction in federal dollars compared to last year. He wouldn't comment on whether he supports the deficit-cutting plan unveiled Sunday, but he said he is anxious to see the debt ceiling raised so that billions of federal dollars continue flowing to the state.