By Gina Tabonares
Variety News Staff

ATTORNEY General Alicia Limtiaco says the U.S. Supreme Court decision on the bond borrowing case will determine the legality of the procurement, tax rebate and Organic Act issues that deal with the government debt ceiling.
Limtiaco yesterday responded to the concerns raised by Vice Speaker Eddie Calvo, R-Maite, and Sen. Judith Guthertz, D-Mangilao.
The concerns are in connection with Bill 23, an administration proposed measure to approve $123.8 million to pay retirees’ cost of living allowances.
But before approving the bill, the senators sought Limtiaco’s opinion, considering former Attorney General Douglas Moylan’s argument that this will become an exercise in futility in the event that the U.S. Supreme Court ruled that further bond borrowing is illegal.
Moylan refused to sign any administration proposed bond borrowing measure during his term, saying that the government failed to update the valuation of Guam real estate which should be the basis of the debt ceiling.
In January, the U.S. Supreme Court heard the arguments on the debt ceiling issue raised by Moylan, but GovGuam has to wait at least until June for the high court’s ruling.
While waiting for the U.S. Supreme Court ruling, the 29th Legislature is exhorting legislative options to immediately pay some of the government’s debt.
Limtiaco said the director of the Department of Administration may make the certification of public indebtedness independent of the Attorney General’s Office but whether or not the certification is correct is uncertain.
“No one can vouch for its correctness until the U.S. Supreme Court issues its decision,” Limtiaco said.
When asked whether the certification should come from the Office of the Public Auditor, Limtiaco said the question should be more appropriately addressed to Public Auditor Doris Brooks.
On the question of procurement, Limtiaco said the proposed borrowing to pay retirees’ COLA does not fall within the parameters of the Guam Procurement Law.
“Assuming that no request for proposals was issued and no sole source determination was made, if the loan transaction proceeds, there would exist a violation of Guam procurement law for failure to bid the project out or to make a sole source determination,” Limtiaco said.
Limtiaco also said that no court has ever ruled on the merits of Guam’s rebate tax programs as far as COLA payments are concerned.
To ensure the tax rebates in the bill do not violate constitutional and Organic Act requirements, Limtiaco suggested that the Legislature state a rational basis for the rebate and the cut-off of the rebate on taxes of a COLA above $30,000.
“Section 9 of the bill is problematic because it is the income tax actually paid that should be rebated, not the withholding. Section 10 of the bill on absolution is unnecessary. Should the amount of COLA already paid during the applicable times equal or exceed the award in this case, he or she would receive nothing. No debt is created in the recipient by this transaction. If there was an overpayment in prior years, that would be a separate action,” Limtiaco said.
She added that the only way the government can unequivocally state that the public indebtedness of the government does not exceed the 10 percent debt ceiling of the Organic Act is to remove any direct or indirect reference to a general obligation, and to ensure that the source of repayment was a traditional special fund. Section 30 funds are not a special fund but a part of the general fund, she said.
“The proposed transaction in the bill is a general obligation which is counted toward the 10 percent debt ceiling. How to calculate the 10 percent debt ceiling, which is a comparison of the current outstanding debt, including the proposed loan, against what Section 11 of the Organic Act calls the aggregate tax valuation will be influenced by the decision of the U.S. Supreme Court,” the attorney general added.