Types of referendum and initiative include:
- Referendum – The legislature refers a piece of legislation to the people to either approve or reject it by vote.
- Compulsory referendum – Typically new constitutions must be submitted to the people for approval before they are considered ratified. Some states also require that bond measures be approved by referendum.
- Voluntary referendum – The legislature may, at their option, refer a piece of legislation to the people.
- Popular referendum – The people may challenge a law recently passed by the legislature. If enough signatures are gathered, the law will be put to a vote by the people who may vote to nullify the law.
- Initiative – Citizens draft a proposed law
- Indirect initiative – Citizens draft a proposed law and present it to the legislature. The legislature may adopt it outright. Otherwise, the proposal goes on the ballot, sometimes with a counterproposal designed by the legislature.
- Direct initiative – Citizens draft a proposed law and it goes on the ballot.
Indirect initiative is rarely used where direct initiative is available (Washington state has both). Popular referendum is also infrequently used because it is less powerful than direct initiative (most initiative states have both). Referendum can merely repeal laws. Direct initiative can both repeal an old law and replace it with a new one. Direct initiative is flexible, but it suffers from one conspicuous drawback.
In a legislature, many interested parties contribute to the drafting of a proposed law. Once the author introduces a bill, it is referred to committee. The committee holds hearings. There is an extensive vetting process. Interested parties can identify drafting flaws, argue for more optimal solutions, and suggest modifications. In contrast, direct initiatives are drafted by the sponsor and the text is finalized prior to beginning signature collection. In most cases, there is no informed deliberation, no consensus-building, and no compromise.
The National Citizens Initiative for Democracy specifies a procedure that incorporates the best of direct and indirect initiative. Like direct initiatives, the incumbent legislature is not involved in drafting an initiative. Like indirect initiatives, a deliberative committee is convened (see Democracy Act, 3-I) to receive testimony from all stakeholders and to rewrite the initiative incorporating feedback and compromise.