I can't help you with the billing aspect, but as for being blackballed for failing the poly, I highly doubt it.  I just finished the police academy and know of plenty of law enforcement dept. that don't even poly for whatever reason.  If you apply at another dept. that poly's don't sweat it.  There are many factors that can make one fail the poly, and just cause you failed it doesn't mean you lied......stay positive, and keep applying

First off, it depends if you signed a form stating taht you would take responsibility for the costs associated with the test.  If you never signed such a thing, they can bill you for it but I wouldn't pay it.

Secondly, while failing a poly is definitely going to look bad when applying elsewhere, it doesn't necessarily mean they will disqualify you for it.  If I were you I would send a letter to the department appealing the results.   

Either way if LE is in your heart don't give up just because you failed once.

I graduated from an open enrollment police academy, I had a interview with a local sheriffs department, I had to take a polygraph test, I went and took it, answered everything the best i could, but I failed it. Two weeks later I get the bill for the test, can they do that, plus the lady who gave me the test said that most likly I will be blackballed from law enforcement. Well I did change careers, just because I dont ever wanna go through that again.