PORTLAND, Ore. (AP) -- A ballot measure phasing out Oregon's estate tax has been rejected.

Oregon's estate tax is assessed on the portion of an inheritance above $1 million. Proponents of Measure 84 say the tax threatens small businesses and family farms, which might have assets above $1 million but not enough cash to cover the tax bill.

Opponents say the measure is a giveaway to the wealthy and would only benefit 2 percent of the richest taxpayers while the state struggles to fund schools and police.

The initiative was pushed by Kevin Mannix, a former Republican nominee for governor and a veteran of Oregon's initiative process. Opposition was led by the liberal group Our Oregon.

The estate tax is expected to generate just under $200 million during the current two-year budget cycle.

Copyright 2012 The AP.