CHICAGO (CBS) — The state of Illinois’ chief investor says if the president and Congress can’t reach a compromise, that means less money in workers’ paychecks.

State Treasurer Dan Rutherford says he’s cautiously optimistic lawmakers will avoid the fiscal cliff before the new years.

But if that doesn’t happen, the Republican sees the higher social security payroll and income taxes hurting the local economy and state coffers.

“If there is more withholding, meaning the consumer has less to spend, then they are going to be a little more judicious on going out and buying products and so forth which affects the sales tax revenue of the state,” said Rutherford.

Rutherford says the cliff will also mean trouble for the markets, which include investments made by individuals and the state.

On the flip side, he says the state stands to lose federal funds for education, public housing and nutrition programs if Washington imposes steep spending cuts.