ANCHORAGE — Under the faded neon sign for Diamond Jim’s along the Seward Highway, Mary Lou’s Liquor Store is so Alaskan it almost seems like a parody.

Rocks in the parking lot are painted like giant gold nuggets. A mural features a grizzly chasing a well-endowed cartoon woman. An old husky mix dozes in the dust out front.

Mary Lou Redmond, the owner, was born just about the time Prohibition ended. She still runs the little liquor store in a crooked log-cabin. You can buy a “dollar beer” there but it will cost you $1.25.

The most Alaska thing about Mary Lou’s is probably her attitude. She’s contrarian, fond of dirty humor and fiercely provincial. And she’s wrapped up in a fight with the government that’s been going on for years. In a state made fat on federal funds but full of people itching to get the government off their backs, you couldn’t find a better heroine.

The fight centers on the neon sign for Diamond Jim’s. The bar closed long ago. But over the last 50 years, the large light-bulb diamond with its neon arrow has become a landmark in Indian. Jim was Redmond’s uncle, a Gold Rush-era pawnshop worker turned Anchorage bootlegger who helped build the train tunnel to Whittier. She and her husband built the log cabin bar in Portage in 1958. After the ‘64 quake, Portage slumped into Turnagain Arm. The government relocated their business to Indian. In the process, she and her husband replanted the neon sign where it sits today.

“When my husband and I come up here, we asked where can we put the sign. They said as long as it’s 50 feet from the middle of the road, you don’t have to move it,” she said.

“I’d swear on a stack of Bibles that’s what they said.”

They probably did. But that was then. Decades passed after Redmond and her husband moved to Indian. The highway got busier and wider, thanks to federal highway dollars. Laws changed, banning billboards in the right of way. About 10 years ago, Redmond started getting letters from the Alaska Department of Transportation. Her sign was in the right of way, they said. It had to be moved.

“They want me to move it up into the trees,” she told me.

Nobody would see it there, she said. It would kill her business.

DOT offered her $2,500, then $7,500, but Redmond did not comply. Gov. Bill Egan himself told her she could keep her sign there, she said. There’s a picture of the two of them taped to one of her beer coolers.

The day the Anchorage Daily News visited, Redmond had on lipstick the color of salmon roe and fluorescent pink stud earrings as big around as silver dollars. Aside from the candy bars and purse-sized bottles of vodka, her inventory includes inflatable “companion” dolls, bikini T-shirts and thong underwear bearing her trademarked “Hardcore Alaskan” logo. Signs are taped all over, written in shaky ink. She reserves the right to refuse service to anyone. She doesn’t allow cellphones.

For a while, some of her neighbors resisted DOT as well. But by the most recent deadline at the end of last month, all the signs came down but hers. Locals rallied around her. They called news media and politicians. Redmond appeared on two TV news programs and the cover of the Turnagain Times. People started calling her from all over the state. At some point, state Rep. Mike Hawker and U.S. Sens. Lisa Murkowski and Mark Begich made inquiries on her behalf.

But the state Department of Transportation didn’t budge.

Bill Kamm, a neighbor, wandered down while I was interviewing Redmond. He wondered quietly whether losing the sign might cut into her modest sales, leading her to close the shop. Working there was keeping her healthy well into old age, he said.

“She’s the happiest oldest person I know.”

DOT spokesman Rick Feller and Jill Reese, a right-of-way agent, have taken a lot of heat on this issue. It wasn’t DOT’s fault, they said. It was The Feds.

At the end of the ‘90s the highway was improved with federal money. One of the conditions of getting that money was that the right of way would be clear. Once the Federal Highway Administration discovered the right of way wasn’t clear, it gave the state two options, Feller said:

“Have the signs moved from within the right of way, or we can reimburse to them the $20 million in funds that were used to build the (Seward Highway) project.”

It was actually $25 million, Reese said. And it was possible that if the right of way wasn’t cleared up, there would be problems with federal highway dollars in the future, Feller said. DOT actually tried to get what’s called an abeyance that would have allowed Redmond’s and other signs to stay, Feller told me. But it was denied.

The Anchorage Daily News called the Federal Highway Administration and got a spokesman named Doug Hecox. He went through a bunch of boilerplate language about rights of way needing to be clear for safety but said he didn’t know anything about the specific problem in Alaska.

Reese and Feller were still hoping Redmond might change her mind. They were not looking for a confrontation with a grandmother. She could take the $7,500, get some new light bulbs for the sign. Maybe build a bench. A fellow could have a smoke while his lady shopped for thongs, Reese suggested.

Redmond wasn’t having any of that. If they wanted to take her sign down, they’d have to do it by force, she said.

“Over my dead body.”

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Information from: Anchorage (Alaska) Daily News, http://www.adn.com