State and Local elections determine the make up of the people's representation in the House of Representatives, as well as the policies of the individual State and Local areas. As such, only funds donated by the people and business domiciled/registered in those local areas should be used to support candidates. This will eliminate outside entities influencing the outcomes of Local and State elections.
The people who are to be governed are the only people who should determine the candidates who will represent them, and not be influenced by outside organizations who often use negative and often libelous information to turn voters against a candidate not in their favor.