The decision is a blow to those who look to public funding to combat corruption in campaign finance.
Under the Arizona Citizens Clean Elections Act, the public financing system funds the primary and general election campaigns of state candidates. Those who opt to participate are given an initial injection of public funds to conduct their campaigns. They also get additional matching funds if a privately financed candidate's expenditures, combined with the expenditures of independent groups made in support of the privately financed candidate or in opposition to a publicly financed candidate, exceed the publicly financed candidate's initial state allotment.
A publicly financed candidate gets roughly $1 for every dollar raised or spent by the privately financed candidate -- including any money of his own.
But past and future Arizona candidates, and two independent expenditure groups that spend money to support and oppose Arizona candidates, challenged the constitutionality of the matching funds provision, arguing it unconstitutionally penalizes their speech and burdens their ability to fully exercise their First Amendment rights.
A federal judge issued a permanent injunction against the enforcement of the matching funds provision. A federal appeals court reversed, finding that the provision imposed only a minimal burden and that the burden was justified by Arizona's interest in reducing quid pro quo political corruption.
However, the narrow Supreme Court majority reversed the appeals court, holding that Arizona's "matching funds scheme substantially burdens political speech and is not sufficiently justified by a compelling interest to survive First Amendment scrutiny."
The court split along its ideological faulty line: five conservatives and four liberals. An opinion written by Chief Justice John Roberts said the "matching funds provision imposes a substantial burden on the speech of privately financed candidates and independent expenditure groups."
Roberts compared the Arizona law to the federal 2002 Bipartisan Campaign Reform Act -- commonly called the McCain-Feingold Act -- which was also struck down by the Supreme Court.