This paper studies the truth-inducing property of a class of budget-variance-based payment schemes calledkinked linear schemes. In these schemes, the manager is either paid a bonus proportional to a favorable budget variance, or charged a penalty proportional to an unfavorable budget variance. With the penalty rate higher than the bonus rate per unit variance, the payment to the manager is piecewise linear in the actual output and kinked at the budgeted output. This paper shows that participative budgeting with kinked linear compensation schemes can induce truthful reporting of expected output from an informed manager even when the manager can shift the underlying output distribution by his unobservable efforts. Furthermore, participative budgeting with kinked linear payment schemes can achieve optimal contracting between a risk-neutral manager and a risk-neutral owner even in a setting where a menu of linear payment schemes cannot.