On balance, the State Elections Enforcement Commission’s decision to settle its legal dispute with the state Democratic Party over alleged violations of the state’s campaign finance laws was the right one.

It still stinks, however.

In his 2014 re-election campaign, Gov. Dannel P. Malloy qualified for and subsequently spent $6.5 million in public money under the Citizens’ Election Program. The entire purpose of the program, passed after a prior gubernatorial scandal, is to prevent special interest money from buying the influence of politicians through their large donations.

To qualify for the state money a candidate has to certify he will not accept individual donations above $100.

But Malloy and the Democrats concluded they had found a loophole using federal election laws. Those laws only apply to federal elections, and running for governor doesn't qualify. But Democrats figured out if they could package campaign material as the get-out-the-vote variety, even if it clearly promoted the governor’s re-election, they could utilize money raised under federal rules and still get the free Connecticut cash.

Worse yet, some of those federal donations came from contractors doing business with the state, something strictly prohibited by state law.

The SEEC launched an investigation. It had asked a Superior Court judge to give it access to campaign finance documents and party communications so investigators could determine how the federal money was raised, used and whether it intermingled with money provided through the Citizens' Election Program. Malloy and the Democrats dug in, saying federal election rules applied and the state had no jurisdiction. A decision was pending.

Now arrives the settlement, approved 2-1 by the SEEC last Wednesday.

The Democratic Party makes a $325,000 “voluntary payment,” but admits no wrongdoing. More importantly, the Democrats agree to new accounting rules to keep campaign money prohibited by state law out of state campaigns. And the party dropped its claim that federal election law pre-empts the commission from issuing subpoenas to investigate alleged potential violations of state elections law.

The payment is roughly equivalent to the value of the disputed expenditures.

While we would have preferred seeing the investigation completed, with investigators and the public getting a good look at the Malloy campaign spending books, the reality is that the judge could have ruled against the state. If Judge Antonio Robaina decided the federal rules applied, the state’s public campaign finance law would have been seriously undermined.

Now the Democrats are agreeing to play fair. They won’t again seek money from companies doing business with the state. And while the deal is not binding on Republicans, it is hard to imagine them trying to exploit the same loophole given this settlement.

It stinks, however, because the Democrats got away with it. The public will never get a look at the documents that could have explained how the Connecticut Democratic Party cooked up this scheme to solicit state contractors for campaign contributions. In arguing state investigators had no right to dig up such information, the party's lawyer, David Golub, told Judge Robaina that the information was "highly privileged and confidential."

We bet.

Using the federal loophole was a contemptuous maneuver by the governor and his party. It’s great that the Democrats are now promising to follow state law. The problem is they should have followed it all along.