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Until and unless initiative backers collect the minimum number of signatures necessary to make the ballot (I believe it is still 244,880), ALL costs are borne by the backers. Here is the process in Washington.
1) I file an initiative to the people by submitting the initiative text, an affidavit affirming that I am filing an initiative, and a nominal filing fee, to the Secretary of State.
2) The SoS sends me a notice that the initiative has been received, and passes the text on to the state's Office of the Code Revisor. The OCR reviews the text, puts it into proper statutory form, and prepares an opinion indicating potential conflicts with existing law. The revised text and opinion, along with a certificate of review, are sent to the sponsor.
3) The sponsor looks over the revised text and opinion. These revisions and opinions are optional; the sponsor may implement them fully, partially or not at all. The current text of the initiative and the certificate of review are returned to the Secretary of State.
4) The SoS has now officially received the initiative. It is given a serial number, and the office prepares the official short title and summary. The ballot sponsor is notified.
5) There is a 5 business day window to challenge the title and summary, which is done by filing suit in Thurson County (the home county of the state capitol, Olympia.) The party that files suit must bear all court costs.
6) After the above window closes, the sponsor prints and distribute petitions, and begins to collect signatures.
Through this time, the cost to the state is minimal. The current fee to file an initiative is $5; there has been talk of raising it to $100. If that goes through (and I would not mind if it did), the filing fee would just about cover all of the state's cost to this point.
Once the sponsor has collected enough signatures to make the ballot, the petitions are turned in to the Secretary of State's office. This initial turn-in must contain at least the minimum number of signatures required, ie the sponsor cannot turn in a few here and a few there. Then, and only then, is there significant cost to the state, as employees of the SoS must validate the petitions. The costs to validate the petitions and, if enough signatures are turned in, to add the initiative to state voter information pamphlets and put it on the ballot, are justified by the considerable public support that has been shown.
So in Washington, merely filing an initiative, getting it into a form to receive a serial number and collecting signatures costs the state very little. Even if the initiative is blatantly unconstitutional or mere political street theater, it cannot really be called a waste of state resources or abuse of the people's legislative authority.
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