After one unsuccessful engagement with the Supreme Court, the State of Arizona continues to work through the implementation of its public financing laws. The issue remains, as before, how it can structure the law to draw candidates into the systems. One strategy it devised did not suit the Court: the state discovered that it could not provide offsetting public funding to participating candidates who faced well-heeled opponents and free-spending independent expenditure groups.

Now Arizona is fighting over another mechanism for encouraging participation, or discouraging nonparticipation, in the public funding system. This one involves reducing the contribution limits to make them less appealing to candidates who are considering electing private support through contributions rather than public financing. In 1998, voters approved Proposition 200, known as the Clean Elections Act, which established a public financing system and reduced the contributions limits then specified by law for candidates who did not participate in the public financing system. It imposed for these nonparticipating candidates a 20% reduction in then-existing limits and established aggregate limits on contributions by candidates and political committees. In 2013, the legislature increased the contribution limits available to nonparticipating candidates and eliminated the aggregate limits.

The Arizona Citizens Clean Elections Commission filed suit, but the question assumed a very technical form. Because Arizona voters had also acted by proposition to condition the legislature’s authority to modify or amend a proposition, the Commission contended that the legislature’s action in increasing contribution limits was an amendment of a Proposition and that the legislature had failed to satisfy the requirements for doing so.

The Arizona Court of Appeals enjoined the contribution limit increase and remanded the case to the lower court for findings of fact and law.  Ariz. Clean Elections Comm’n v. Brain, 1 CA-SA 13-0239 (Oct. 24, 2013). It specifically directed the court below to issue findings of fact and conclusions of law on the legislature’s claim that, even if the new, reduced limits were upheld, they were so low that they violated the First Amendment.

Another question, not discussed, is what federal courts would make of the reduction in the limits as a means of encouraging participation in the public financing scheme—or discouraging refusals to participate. The State of Arizona has argued that Proposition 200 served a purpose of countering corruption, but also that without a reduction of the limits, participation in the public funding program would “become less viable.” Petition for Special Action, Ariz. Clean Elections Comm’n v. Bennett (July 13, 2013) at 30. By this it meant that “candidate decisions whether to run as ‘participating’ or ‘non-participating’ candidates in the 2014 elections will be influenced” by the increased contribution limits passed by the legislature. Id. at 6. And the Arizona Court of Appeals has now sustained an injunction against the increase in the limits in part on the basis that they “may have driven candidates away from the public financing system created by the Clean Elections Act.” Brain at 32.

The Supreme Court first expressed in Davis v. FEC its disapproval of “penalties” exacted for public policy purposes in the form of different contribution limits for competing candidates. 554 U.S. 724 (2008). In Davis, Congress was offering higher limits under certain circumstances to candidates facing “millionaire” opponents. The reasoning was then adapted to the public financing regimes in Arizona, which offered to participating candidates supplemental public financing keyed to the spending of nonparticipating opponents and independent expenditure groups. In Ariz. Free Enter. Club’s Freedom Club PAC v. Bennett, 131 S. Ct. 2806 (2011), the Court rejected as constitutionally insufficient the state’s “goal of creating a viable public financing scheme” by adjusting limits to “cause a sufficient number of candidates to sign up for public financing….” 131 S. Ct. at 2828.

Arizona’s voters established limits at one level to control for corruption, then cut them across the board at least in part to support the viability of a public financing scheme. While the Court has given the states wide latitude in sculpting limits, see Nixon v. Shrink Mo. Gov’t PAC, 528 U.S. 377 (2000), a majority of the Justices are notably suspicious of limits crafted to achieve collateral goals beyond that of protecting against corruption. As framed in the ongoing Arizona litigation, the issue on remand is whether the limits are too low to allow for First Amendment-protected activity. Another question that may surface later in this litigation is about the purpose of the reduction in the limits and any separate issue it may present under Davis and Ariz. Free Enter. Club.