* Obama administration supported the law
* About two-thirds of state candidates accept public funds
* Law adopted in 1998 after corruption scandals
By James Vicini
WASHINGTON, June 27 (Reuters) - The U.S. Supreme Court struck down on Monday an Arizona law that provides additional public money to political candidates for state office who face big-spending opponents, ruling it violated free-speech rights.
The high court handed down its first decision in a campaign finance case since ruling last year that corporations have the free-speech right to spend freely to support or oppose federal candidates.
Still, the ruling will have little impact on the presidential financing system as the candidates race to raise perhaps billions in cash to compete. Even if it did, the presidential candidates in 2012 are not likely to use it, said Tara Malloy, an attorney with the Campaign Legal Center which backs the Arizona law.
“Unfortunately the presidential system is probably going to be underutilized by the candidates in 2012,” Malloy said. “(President Barack) Obama was the first candidate in decades not to accept public financing and the same will probably be true of the Republican challengers.”
Obama and fellow Democrats in Congress have criticized, while Republicans have praised, the 5-4 decision in January last year that overturned long-standing limits on corporate spending in federal elections.
The latest ruling by the court’s conservative majority held the Arizona law, adopted in 1998 after a number of corruption scandals, violated free political speech in elections.
The high court’s expected ruling cited its 2008 decision that struck down a similar federal law.
In Arizona, candidates who opt for public financing of their campaigns can get funds up to twice their base amount when outspent by privately funded rivals or targeted by independent group spending. Eight states have similar laws.
Arizona said about two-thirds of state office candidates opt for public financing under the law, the Citizens Clean Elections Act.
Arizona, the Obama administration and other supporters said the law was designed to deter corruption and placed no limit on how much privately financed candidates may raise or spend.
Opponents said the law violated free-speech rights of the privately financed candidates and their contributors, inhibiting fundraising and spending, discouraging participation in campaigns and limiting what voters hear about politics.
The court split by a 5-4 vote along ideological lines in striking down the law.
Chief Justice John Roberts said in the court’s majority opinion that the law substantially burdened political speech and was not sufficiently justified to survive First Amendment scrutiny.
Liberal Justices Stephen Breyer, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan dissented.
Kagan, who was appointed by Obama, wrote a strongly worded dissent that she read parts of from the bench.
“The First Amendment’s core purpose is to foster a healthy, vibrant political system full of robust discussion and debate,” she said, adding that nothing in the law violated this constitutional protection.
The Supreme Court cases are Arizona Free Enterprise v. Bennett, No. 10-238, and McComish v. Bennett, No. 10-239.
Additional reporting by Kim Dixon Reporting by James Vicini