The Manassas Park City Council has cut the town's real estate tax rate by 40 cents, following a reassessment that increased property values an average of 25 percent.

An $11.4 million operating budget was approved by the City Council last week, setting the real estate tax rate at $1.90 per $100 of assessed value. The council backed off from acting city manager Jerry Davis' proposal to cut the real estate tax rate by an additional five cents.

"We wanted some buffer so we kept $30,000 in the emergency contingency fund, while Mr. Davis' budget didn't call for any," said Mayor Wendall R. Hite. "We are just guessing at what federal and state money will come in, and we wanted to make sure services were provided. I have reservations about just how much money we are going to get in revenues in the coming year."

At the same time the council approved the fiscal 1983 budget, it gave Davis the go-ahead to borrow up to $200,000 on short-term credit because city revenues are coming in too slowly to meet all the April bills. The loan will be paid off before the end of June, when property tax payments start coming in, the mayor said.

"Normally we have enough money to pay our obligations without having to borrow," Hite said. "But there will be a 10-to-15-day lag between taxes coming in and funds being spent. So rather than cashing in our [$1.1 million] savings certificates, we elected to borrow on a short-term basis.