Back in 1998, in response to rampant political corruption, the people of Arizona passed the Arizona Citizens Clean Elections Act. The act allowed people running for office to fund their campaigns with state money. But there were conditions. The candidate had to raise a certain number of $5 qualifying contributions within a specified time period. They could not accept private donations. They could not spend more than $500 of their own money. They had to participate in at least one public debate. Candidates received a predetermined lump sum amount. If a privately-funded candidate out spent them during the campaign, then the state would grant the publicly-funded candidate ninety-four cents for each dollar they were outspent by. But the maximum amount the publicly-funded candidate could receive was capped at three times the amount of the initial lump sum. A privately-funded candidate was free to raise and spend unlimited funds.
The intent of the Clean Elections Act was to create conditions for greater citizen participation in elections and reduce the likelihood that elected candidates would be beholden to private financiers instead of the public. Publicly funded elections allow more, and more diverse, people to run for office.
The US Supreme Court, in a 5-4 ruling (68-page PDF), determined that the state's matching funds were unconstitutional. Why? Because it imposes a substantial burden on the political speech of the privately-funded candidate as well as on an independent group spending money on a campaign. If the privately-financed candidate spent more money than their state-funded opponent, the state-funded opponent would receive matching funds up to a point. Consequently, the burden placed on the privately-financed candidate is taking into account that spending more will allow the publicly-funded candidate to spend more--up to a point. More privately-funded political speech would result in more political speech from the publicly-funded candidate--up to a point. Chief Justice Roberts says that is unconstitutional and that there is no compelling state interest for providing matching funds.
Here is how the system works. If Candidate A is running for the Arizona state legislature and agreed to public funding and made it to the general election, they would receive $21,533 to run their campaign. If their privately-financed opponent, Candidate B, spent more than that amount, then Candidate A would receive $.94 for every dollar Candidate B spent above $21,533. If an independent organization spent money for Candidate B or against Candidate A then that would count also. But Candidate A would receive no more than $64,599 or three times the amount of the initial lump sum. Candidate B--and independent organizations--are free to spend as much as they wish without limit.
It will be interesting to see just how much more the privately-funded candidates and their supporting organizations will spend in Arizona now that they are no longer unfairly burdened with a keel that was even--up to a point--and now that there is no compelling state interest in reducing political corruption. I know the opinion is 68 pages long, but it's worth reading--especially Justice Kagan's evisceration of Chief Justice Robert's majority opinion.