WASHINGTON–A narrowly-divided U.S. Supreme Court on Monday ruled that supplemental grants triggered by an opponent’s spending in state public funding systems are unconstitutional.

The 5-to-4 decision means Connecticut will not be able to revive the matching grants that helped fuel the bids of both Democrat Dannel P. Malloy and Republican Michael C. Fedele in last year’s expensive gubernatorial contest, as they competed against two wealthy, self-funding opponents.

The case at issue in today’s ruling involved an Arizona law that–just like Connecticut’s–provided candidates participating in the state’s public financing system extra funds based on their opponents’ spending. Proponents of such matching-grant provisions argued that they fostered a more robust debate in elections, made public financing more workable, and helped guard against corruption by limiting special interest campaign contributions.

But opponents said they actually stifled free speech and punished candidates who declined to participate in public financing-because any money they injected into their own campaigns could trigger public grants to their opponents. In Monday’s ruling, the majority agreed with the latter argument, saying that Arizona’s matching grant system “substantially burdens protected political speech” and violates the First Amendment.

“Laws like Arizona’s matching funds provision that inhibit robust and wide-open political debate without sufficient justification cannot stand,” Chief Justice John Roberts wrote in the majority opinion.

“Any increase in speech resulting from the Arizona law is of one kind and one kind only-that of publicly financed candidates,” Roberts wrote. “This sort of ‘beggar thy neighbor’ approach to free speech,” in which one person’s speech is enhanced relative to others, flies in the face of the First Amendment, Roberts concluded in an opinion joined by Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas, and Samuel Alito. They are the court’s conservative bloc, although Kennedy is often seen as a swing vote.

Connecticut’s attorney general, George Jepsen, blasted Monday’s decision, saying the Supreme Court has “seen fit to interfere with democratically enacted reforms to our system of financing electoral campaigns.”

Those reforms were a result of voters’ desire to “find ways to fix a system that favors highly financed candidates, but the Court is just as determined to be an obstacle to the public will,” Jepsen said, adding that today’s decision will “lead to even higher campaign spending” and could undermine public financing systems.

Jepsen had filed a brief in favor of Connecticut’s matching grant system before the Supreme Court heard arguments in the case earlier this year, and at the time he said a ruling in favor of Arizona’s system would “restore the flexibility of Connecticut and other states in designing and implementing public campaign finance systems.” (Ned Lamont–who spent $9 million of his own money in last year’s Democratic gubernatorial primary race–also weighed in on the case, joining with other self-funders to file a brief in support of matching grants.)

The four liberal-leaning justices filed a dissenting opinion, which took strong issue with Roberts’ contention that the law stymied free speech or punished self-funding candidates.

“Arizona imposes nothing remotely resembling a coercive penalty on privately funded candidates. The state does not jail them, fine them, or subject them to any kind of lesser disability,” Justice Elena Kagan wrote for the minority. “Except in a world gone topsy-turvy, additional campaign speech and electoral competition is not a First Amendment injury.”

Kagan also argued that Arizona’s matching funds provision was an inventive fix to lump-sum payments that often do not accurately reflect the true cost of campaigns. The result was “more speech” and “less corruption.”

The idea behind the triggered grant systems enacted in Arizona, Connecticut, and elsewhere were that they provided for flexibility in different contests, especially those with wealthy self-funding opponents. Instead of one big payment, the grants are escalated depending on how much a race is actually costing-with the matching grants doled out to participating candidates when opponents cross certain spending thresholds.

In Connecticut, Malloy and Fedele got $2.5 million in funding grants through Connecticut’s Citizens’ Election Program, allowing them to keep pace with their respective self-funding opponents, Ned Lamont and Tom Foley, during last summer’s primary.

That was before Connecticut’s system was deemed unconstitutional, in a ruling by the U.S. Court of Appeals for the 2nd Circuit in the middle of Connecticut’s 2010 gubernatorial contest last July. In the wake of that decision, state legislators convened a special session and enacted a measure doubling the general-election grants, from $3 million to $6 million, for gubernatorial candidates participating in the state’s public financing system.

That fix was designed to make sure Malloy and Fedele had enough money to keep up financially, in the absence of a trigger provision bumping up their payments whenever their opponents dipped into their own bank accounts to fund their bids.

Kagan, in her dissenting opinion, said such incremental systems could help preserve public financing as a viable, attractive option in campaigns. Without it, grants that are too low put participants at a disadvantage, making the decision to participate a tougher one, she wrote. And grants that are too high waste public resources. “The difficulty, then, is in finding the Goldilocks solution-not too large, not too small, but just right,” Kagan wrote, which Arizona was trying to do.

But Roberts said that effort was deeply flawed. “We do not call into question the wisdom of public financing as a means of funding political candidate,” the majority said. But the Arizona’s law “goes too far” in trying to encourage participation in public financing. He noted, for one thing, that the triggered grants apply not only to spending by opposing candidates, but also to spending by independent groups.

“That disparity in control-giving money directly to a publicly financed candidate in response to independent expenditures that cannot be coordinated with the privately funded candidate-is a substantial advantage for the publicly funded candidate,” Roberts wrote. “The record contains examples of specific candidates curtailing fundraising efforts and actively discouraging supportive independent expenditures, to avoid triggering matching funds.”

The Yankee Institute for Public Policy, a conservative think tank based in Hartford which had filed a brief opposing such matching grants, and said today’s ruling was a victory against such “taxpayer funded campaign schemes.”

“Taxpayers should not be forced to pay for the campaigns of candidates they oppose,” Fergus Cullen, executive director of the Yankee Institute, said in a statement Monday. “When government is involved in leveling a playing field, it usually means tipping the field for or against certain candidates.”

The Connecticut chapter of Common Cause, a campaign reform advocacy group, criticized the Supreme Court’s ruling but said the basic elements of the state’s public financing system would remain intact.

“This ruling affects one mechanism of public financing, and we know from Connecticut’s experience that there are numerous ways to fix it,” Karen Hobert Flynn, vice president at Common Cause, said in a statement Monday. “Our own Citizens Election Program functioned effectively without trigger provisions in the general election of 2010.”

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