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State Treasurer explains potential impact of federal debt ceiling impasse
Online Staff Report
SPRINGFIELD, Ill. — Illinois Treasurer Dan Rutherford is expressing concern about the effect to Illinois government money should the debate on the federal debt ceiling fail to produce a higher ceiling.
“My first priority is to protect the state treasury,” said Rutherford.
“Let me assure you that the first priority as state treasurer is the security of the state treasury,” Rutherford continued. “The second priority is to earn a return on investment. Should the debt ceiling remain and there is a default, the state treasurer’s office may have to keep money in non-interest bearing, yet safe, FDIC-insured accounts until this debate is resolved.
“As of July 25, 36 percent of the state investment portfolio, or $3.6 billion, will have to be re-invested within 30 days,” Rutherford added. “In addition, 58 percent of the Illinois Funds (municipal funds) investment portfolio, or $3.2 billion, will have to be re-invested within 30 days. This gives you an idea of how much of these funds may be impacted.
“The bottom line is that these funds will be safe,” Rutherford said. “I do have another concern, however, that the debt ceiling problems will lead to a downgrade in the federal government’s bond ratings. That could lead to a downgrade in the State of Illinois’ bond rating, and, therefore, municipal bond ratings.
“What is happening in Washington, D.C., has an impact on my job as state treasurer,” Rutherford said. “Further debt here in Illinois is not good. The threat of what could happen substantiates my call for [Illinois] Gov. [Pat] Quinn to not pursue billions of more dollars of debt on the taxpayers of our state.”