THE MAYOR and a field of candidates are jockeying for fiscal position in a spirited contest to prove which is simultaneously the more generous and frugal. Mayor Barry, you'll remember, was last seen pointing to $68.3 million, which--to his professed surprise and certain delight--showed up on the plus side of his municipal books. This cache, he counseled wisely, should be combined with other payments to reduce the long-term deficit accumulated by the city over the years long before his administration and auditors began straightening out the ledger. For the fiscal '83 budget now under consideration, the mayor had proposed that $16.5 million be earmarked for reducing the deficit.

To beef up the revenue yield for this budget, Mr. Barry proposed increases in the gross receipts tax on utility companies, some long-overdue raises in waste disposal fees and revisions in the real estate tax procedures affecting new construction. Coupled with conservative revenue estimates, the proposals made fiscal sense.

But in the politically charged air at city hall, frugality breeds contempt--and the council isn't buying the mayor's low revenue estimates. Surely there will be more coming in than he says, the council is saying, and so you should forget those tax proposals and cut back on the amount to be set aside to help reduce the deficit.

That may seem a politically clever thing to do, but only if taxpayers are willing to accept a buy- now/pay-later policy based on revenues that may or may not turn up, bonds that may or may not be marketed and annual federal payments that may or may not be generous enough.

In fairness, the council members are not guilty of reckless disregard of the deficit. In their report, they cite "the need to continue to responsibly budget for the repayment of the deficit" and peg their hopes on bonds, based on a bond rating that would be contingent on a reduction of the deficit. And, as proposed by member Nadine P. Winter and accepted by the council, the report contains a mandate to look at the revenue estimates in six months to see if money can be redirected toward the deficit.

Sound fiscal policy dictates a more conservative approach, which Mayor Barry's set-aside proposals and cautious revenue estimates do offer. The council's response is based on too many ifs and not enough buts--and residents who want their city on solid financial ground as soon as possible should support the mayor's current effort to get the District out of the red.