Rutherford says he might put those billions into accounts that are insured but offer no interest. That could cost the state millions of dollars each month in lost interest payments.
Rutherford, who is in charge of watching over state coffers, said he has been holding twice-daily meetings with investment teams to gauge just how to respond if the ceiling isn't raised by Tuesday, and if federal and state bond ratings are subsequently downgraded.
"I'm not pulling a fire alarm here," he said at a news conference in Chicago Friday. "I am here as the treasurer, coming forward to assure the public of Illinois that state portfolios are going to be secure. This treasurer will not be taking the risk."
Late Friday afternoon, Republicans in Congress pushed legislation to extend the government's borrowing authority and cut spending through the House. The 218-210 vote set up a confrontation with the Democratic-controlled Senate and President Barack Obama, who say the GOP-written measure will die in the Senate.
Before Friday's vote, 40 Illinois mayors released a joint letter saying they feared dire consequences if Congress can't agree on giving the federal government permission to borrow more than the current $14.3 trillion debt.
"It will cause grave damage for our cities," the letter warned. "Instability in the municipal bond markets impedes our ability to build infrastructure and create jobs."
Some of that skittishness was shared by protesters in Springfield on Friday, as they worried the impasse over raising the debt ceiling could lead to deep cut in social services. Around three dozen retirees and workers who provide services to seniors and the disabled protested the U.S. debt deadlock at Sen. Mark Kirk's capital office, some chanting, "Show some guts; stop the cuts."
Others suggest the immediate impact on Illinois of a failure to raise the debt ceiling would be minimal.
"Illinois should be prepared," said Fred Giertz, an economist with the Institute of Government and Public Affairs at University of Illinois at Urbana-Champaign. "But I don't think there is going to be gigantic short-term consequences for Illinois."
Moreover, he believes Congress will reach agreement, if not by Tuesday, then shortly thereafter.
Giertz questioned the necessity of placing billions in a safer, zero-interest account, saying it would be a matter of being "ultra-safe." But he said it wouldn't cause much harm to the state, either.
(The Associated Press contributed to this report.)