National Review discusses the idea:

Regulatory budgeting is a simple concept. It’s based on the premise that regulatory costs — what it costs the state to enforce a regulation and what it costs individuals and businesses to conform to a regulation — are similar, in concept, to the expenditures governments make through the budget process. Government spending is subject to regular scrutiny. Why not regulations?

Regulatory budgeting thus seeks to apply basic budgetary principles, such as prioritization and trade-offs, to the management of existing regulations and to the development of new regulations. Departments and agencies are given “regulatory budgets” based on the number of regulations, rules, and directives they issue, along with their estimated economic costs, and they are expected to live within them. Any new regulations must be offset by “savings” realized by eliminating existing regulatory requirements. The goal is to bring greater accountability, discipline, and transparency to the regulatory process.

The idea sounds similar to regulatory reciprocity, which I have promoted for years here. Recently in Carolina Journal, for example, I suggested the “price” for any new rule should be the retirement of two old rules:

This approach would also introduce opportunity cost to agency rulemaking, as agencies would have to consider the trade-offs of creating a new rule.

Regulatory reciprocity in North Carolina could also lead to a voluntary speeding up of periodic review, as agencies might face internal pressure not to wait the full allowance of 10 years to report unnecessary rules if identifying and culling them out earlier would clear the path for a new rule it considered necessary.

To be the most effective, however, regulatory reciprocity should trade like rules for like. In other words, trading in two unnecessary minor rules for one major rule could have a net negative impact on the state’s regulatory climate and economy, even though it would reduce the total stock of rules.

The annual cost of regulation to individuals and businesses North Carolina has been estimated to be up to $25 billion.