The state of Hawaii has a $1 million budget shortfall. In order to raise the revenue necessary to cover the shortfall, Hawaii increases the tax rate on surfboard rentals from 6% to 12%. Since most Hawaiians that surf own their boards, this is largely a tax on tourists. Last year, the pretax value of surfboard rentals was $16.67 million. Of course, there are plenty of other activities to do while visiting Hawaii and none of those activities had a tax rate increase. Hawaii's estimate of new revenue from the tax is about $800,000. Hawaii uses what kind of forecasting?

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