Utah has long been known for having lax campaign finance rules, but a new state law went into effect this week that imposes stricter limits on how former state candidates can use leftover campaign funds.

That law, however, was designed with a loophole that allows a state politician to transfer unused campaign money from a state account into a personal account, pay taxes on it and then use the money to finance a federal campaign run.

The law was passed earlier this year by a state Legislature that has its fair share of members with aspirations of running at the federal level some day.

“There is no question there are several state legislators who are eyeing— federal races, said Kirk Jowers, head of the University of Utah’s Hinckley Institute of Politics. “We have two of the longest-serving, oldest Senators. We have a fourth [Congressional] seat we will receive [in the next reapportionment]. So I think there was certainly some feeling of, Lets give ourselves maximum flexibility with these campaign funds.’—

But the new law has also raised some interesting legal questions when it comes to federal campaign finance rules. Some campaign finance experts wonder whether the new law is little more than a way to circumvent federal provisions that prohibit the use of state campaign funds to run for federal office.

State Attorney General Mark Shurtleff (R) would have to defend the Utah law if it were challenged in court, and he admitted last week that he was unsure whether the new provision was in compliance with federal regulations.

“It’s questionable whether it will pass federal muster, and I’m sure there will be a challenge,— Shurtleff said.

And because of that, Shurtleff — who is in possession of a state campaign account that runs into six figures — said he won’t make use of the new law in his expected primary challenge to Sen. Bob Bennett (R) next year.

“I’m not prepared to opine on whether federal law would supercede that state law, but I certainly don’t intend to be the test case on it,— he said. “I believe I can raise all the money I need under [Federal Election Commission] rules and not mess with that.—

Shurtleff, who intends to make his electoral plans known Wednesday at a press conference in Salt Lake City, is considered a serious threat to Bennett.

The attorney general won a third term in November with 70 percent of the vote and has shown an ability to raise large sums of money statewide.

As they look ahead to a possible primary matchup, some Bennett supporters have been concerned that Shurtleff might use the new state campaign finance loophole to move the more than $100,000 in his state campaign account to a Senate campaign account. But Shurtleff dismissed such a move.

“I wish frankly Bennett would be more concerned about getting back billions of dollars in taxpayer money that went to Wall Street than he is about the potential fundraising of a a potential opponent,— he said.

Jim Bennett, the Senator’s son and campaign spokesman, called those comments a misrepresentation of the Senator’s record and a deflection from the campaign finance issue.

“It’s Mark Shurtleff’s responsibility to determine whether or not he is going to play by the rules, and it’s our responsibility to make sure people recognize how valuable Sen. Bennett is to the state of Utah,— Jim Bennett said.

Sen. Bennett has been widely criticized by conservatives for supporting the Wall Street bailout vote last fall, and many of those same conservatives are still angry with the Senator for his opposition in 2005 to a constitutional amendment banning flag burning.

The three-term Senator has been working hard to shore up his right flank since the bailout vote.

Bennett had about $625,000 in the bank at the end of March, according to state disclosure records, but some Republicans are still smelling blood. Utah papers reported Tuesday that Republican Tim Bridgewater, a former Congressional candidate who has been running for state GOP chairman, now has plans to run against Bennett as well.

As for Shurtleff, some Utah insiders have said the attorney general — who has had his own issues with conservative voters in the state — might gain traction in the race if he runs on a strict anti-Washington, D.C., message.

“In Utah, especially among the delegates [who attend the party’s nominating convention], there is a big number who are anti-Washington, and they will hold against Bennett his vote— on the Wall Street bailout, Jowers said.