A budget surplus presents both a boon to decision- makers elected to spend it wisely — and a precarious situation as well.

State lawmakers have been grappling with that, and now it’s the Honolulu City Council’s turn to figure out how much of its current windfall to spend on key services, and how much to give back to taxpayers whose property values have ballooned, fattening up their property tax bills.

The two sides — a Council pressing for long-term tax cuts and a city administration that wants to close crucial gaps in services — are likely to meet in the middle someplace. But it seems clear at this point that anything beyond targeted tax breaks to those who need it most would drain city coffers excessively and defer some important expenditures needed now.

The city’s $3.41 billion budget has increased as a result of the spike in assessed valuations, driven up last year in part because of low property inventory and an overheated seller’s market. That rise has produced roughly $200 million in additional revenue, Council Chair Tommy Waters told the Honolulu Star-Advertiser Friday on the paper’s “Spotlight Hawaii” webcast.

There is considerable pressure from the taxpayers who voted Council members into office to lower tax rates, to counterbalance that valuation surge. Cuts to the budget have been proposed to compensate, about $206.2 million in all.

Mayor Rick Blangiardi also has heard these complaints. He proposes offering a one-time tax credit of $300 for each taxpayer, easing the effect of the currently higher bills.

But he’s also heard alarm bells about various needs of city governance. His administration has faulted the Council proposal in Bill 11, which would reduce the salaries portion of the budget by about $122.3 million — at a time when police staffing and facilities maintenance both need a boost.

Further, the mayor has cited chronic department staffing vacancies as hindering core services, such as addressing the ongoing homelessness crisis. There are needed investments in information technology in agencies such as the Department of Planning and Permitting to improve the efficiency of its operation, a central plank in Blangiardi’s campaign platform.

The mayor makes a strong argument for making these investments now to improve capacity to deliver on these pledges, and to rebuild an operation that’s more efficient for the long term.

Finally, as Blangiardi also rightly argued, enacting long-term tax cuts at a time of economic uncertainty could leave the city short of funds needed for the future.

On Friday, Waters said the mayor’s tax credit would cost about $44 million in revenue, with another $7 million being set aside for the city’s rainy day fund. Most of the rest of the surplus, he said, would be spent on filling vacant positions.

Important as that is, the Council chairman had a good point that some of these positions should be evaluated to determine whether they’re still necessary.

Waters acknowledged that the city had more than 3,000 vacant positions last year, about 30% of the city workforce; understaffing does impede city services. But some have been vacant for 10 years, and perhaps some of that money could be better spent.

The Council is considering some 30 bills to improve tax relief, including expanding existing programs. One allows anyone making $60,000 or less to cap property tax at 3% of income, he added; only 3,500 homeowners take part in that.

Such provisions should be better promoted by the city, of course, but adding to the benefits at this point must be done with care. It is good that the Council formed a Permitted Interaction Group to look more strategically at tax-relief proposals. Any bills that emerge should be tailored to those at the low-to-moderate income levels.

MEANWHILE, until residents can see that services are improving, they will recoil at the notion of giving any of these so-called public servants the enormous pay raise that seems headed their way.

Last week the Honolulu Salary Commission voted to give the mayor and department heads a 12.58% pay bump and members of the City Council raises of more than 64%.

A raise is one thing; an outsized enhancement like that is plain obnoxious. Accepting such increases would be outrageous, especially having done little to earn it at this point.

The commission’s rationale for the Council raises in particular is that the $113,000-plus is a more competitive full-time salary than the $68,904 members now get.

Not much sympathy here. Each of them knew what the job paid when they sought it.

And the setup for clearing these raises is wrong: The raises go into effect July 1 unless the Council votes to reject them. They should be shamed into doing that now.

For the future, the City Charter should be amended so that a Council member must go on the record to vote for a raise, showing at least accountability for that.

This might even persuade more voters that the Council cares how their tax dollars are spent.