Limtiaco v. Camacho
The Supreme Court ruled that Guam's borrowing limit must be measured against the assessed value of property, not its higher appraised market value, reversing the Guam Supreme Court.
Because Guam assesses property at just 35% of appraised value, the choice of valuation method dramatically changes how much debt Guam's government can legally take on to pay its bills.
How it got here: Guam's Supreme Court sided with the Governor; the Ninth Circuit granted review but later dismissed it after losing jurisdiction over Guam appeals, and the attorney general sought Supreme Court review.
The Case in Depth
What happened
Guam's legislature authorized the Governor to issue roughly $400 million in bonds to cover budget shortfalls, but Guam's attorney general refused to approve the bond contracts, believing the bonds would push the territory's debt above the limit set by its federal Organic Act. The Governor asked Guam's Supreme Court to declare the bonds lawful, arguing the debt cap should be measured by higher appraised property values rather than lower assessed values.
The question before the Court
When Guam's Organic Act caps public debt at 10% of the "aggregate tax valuation" of property, does that mean the property's assessed value or its appraised market value?
The Court's answer
The Court ruled that Guam's debt limit must be calculated using the assessed value of property, not its higher appraised market value. It reasoned that the phrase "tax valuation" naturally refers to the value used to calculate taxes — the assessed value — rather than a raw market appraisal that is one step removed from taxation.
The Court also had to resolve a threshold timing question: because the Ninth Circuit had agreed to hear an earlier appeal in this case, the Guam Supreme Court's ruling wasn't truly final, and the 90-day deadline for seeking Supreme Court review didn't start running until the Ninth Circuit later dismissed that appeal. That made the attorney general's petition timely, letting the Court reach and decide the valuation question.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
The ruling sharply lowers the dollar amount of bonds Guam's government can lawfully issue, since assessed value is only 35% of appraised value there. That affects Guam's ability to borrow money to cover budget shortfalls, and it also resolved a jurisdictional puzzle about when a territorial court judgment becomes final for Supreme Court review purposes.
What changes now
The case goes back to the Guam Supreme Court for further proceedings consistent with the ruling, meaning Guam's borrowing capacity must now be recalculated using assessed property values rather than appraised values. This is a final merits decision, not a temporary order, though it leaves it to Guam and Congress to address any resulting practical or political issues about how assessment rates are set.
What this does not decide
The Court expressly limited its finality ruling to these unique procedural circumstances — a properly granted appeal later dismissed for loss of jurisdiction — and said it does not extend to improperly filed appeals or filings used merely as delaying tactics.
Concurrences and dissents
Dissent in part — Justice Souter
“The Court’s approach, by contrast, gives the legislature a green light to subvert its own stated limit with a clear conscience.”Souter's warning that tying the debt cap to assessed value lets Guam's legislature evade the limit by changing assessment rates.
Justice Souter agreed the petition was timely but disagreed on the merits. He argued the phrase 'tax valuation' is genuinely ambiguous between assessed and appraised value, and that looking to Congress's underlying purpose — preventing Guam from taking on crushing, unsustainable debt — points to appraised (market) value, since assessed value can be manipulated by simply changing the assessment rate, undermining any real debt cap.
How the Court got there
The legal reasoning, step by step
- The Court first had to decide whether it even had power to hear the case, since the attorney general's petition was filed more than 90 days after Guam's Supreme Court ruled. The Court applied the rule that only a truly final judgment starts that 90-day clock, and a judgment isn't final while a further appeal could still change the outcome.
- Because the Ninth Circuit had granted review of the case, that pending appeal kept the question of the parties' rights open, so the judgment did not become final until the Ninth Circuit actually dismissed the appeal in 2006 — meaning the attorney general's later petition was timely.
- Turning to the merits, the Court read the statutory phrase 'tax valuation' by its plain meaning: it identified the type of valuation to be performed, not which properties count, so 'tax' modifies 'valuation' and points to the value used to calculate taxes — assessed value — not a step further removed appraised market value.
- The Court rejected the Guam Supreme Court's inference that Congress's failure to use the word 'assessed' (as it did for the Virgin Islands) meant Congress intended appraised value, reasoning that Congress's silence about any specific term is not proof it meant a different one.
- The Court noted that most states peg municipal debt limits to assessed value and that Congress used no special language suggesting Guam should be treated differently, reinforcing that assessed valuation was the correct reading.