Accounting Professor Dongkuk Lim Examines Ethical Practices of City Budgeting with New Study

The persistent uptick in US municipal budgets may be a cause for concern, according to professor of accounting Dongkuk Lim, as he explains in his recently published study “Monitoring Mechanisms and Budget Variances: Evidence from the 50 Largest US Cities.”

Following a decade of research across the most populous cities in each US state, Lim’s study found that most city governments set revenue budgets that periodically increase but rarely decrease—even after experiencing a surplus. Having considered the many factors affecting city budgets and how these budgets relate to municipal leaders’ governance, Lim believes that checks and balances, such as monitoring mechanisms, can promote the more ethical collection and use of municipal funds. 

“City revenue budgets are like a thermostat that only turns up but rarely down, even after a warm year,” explains Lim. “Surpluses should buy flexibility and trust, not automatically ratchet the next year’s revenue targets."

Lim expresses that this revenue-seeking behavior may be misaligned with residents’ welfare. As an accounting researcher, Lim shares he has watched several major cities flirt with or file for bankruptcy, despite increasing budgets and receiving high revenues that often reach billions. Such events raised a question that propelled Lim’s research: under what conditions can seemingly self-reinforcing budget patterns be altered or improved to better serve the welfare of American taxpayers? 

Analyzing the data he collected, Lim’s key findings indicated that three dynamics amplified an increase in budget: strong mayor systems, weak regulatory environments, and low electoral challenge—a situation in which leadership lacks incentive to prioritize voters’ interests in policy decisions. 

Lim suggests that checks and balances such as guardrails, competition, and transparency can offset the impact of such circumstances and “help budgets come back down to earth.” 

He further adds, “Monitoring systems that require leadership accountability will dissuade opportunistic behaviors and promote the ethical handling of taxpayer’s money. Such policies may include requiring written justification for not lowering revenue budgets after significant surpluses and transparent platforms that show residents how prior surpluses affect the following year’s revenue plan.” 

Lim shares that his Christian faith drives his commitment to proactive research on this topic, especially as persistent issues like poverty and homelessness affect the residents of major cities, even amid rising municipal budgets.

“I believe that this study sheds new light on the effectiveness of different monitoring systems,” says Lim. “As a researcher, I hope my data can lead to systemic improvements benefiting communities now and for generations to come."