FAIRBANKS - Gov. Frank Murkowski would like Alaskans to spend their permanent fund dividend checks wisely, perhaps putting it toward their children's' education.
Fairbanks snowmachine dealer Craig Compeau would rather see people buy a new set of sleds for the family.
Therein lies the dilemma many Alaskans faced Wednesday when a check for $845.76 was deposited into their bank and credit union accounts: Do you blow it or do you stow it?
"Some people pay their heating oil bill with it and some people buy toys," said Compeau, owner of Fairbanks' largest boat and snowmachine dealer. "We like the latter."
The state transferred more than $372 million into banks and credit unions Wednesday as residents who chose to have their checks direct deposited - nearly three-quarters of the more than 603,000 applicants - receive their annual bonus for living in Alaska.
Residents who did not select direct deposit will receive their checks later this month. Checks will be mailed beginning Oct. 26.
The Alaska Permanent Fund, created in 1976, is a giant bank account made up of royalties paid to the state from the trans-Alaska oil pipeline. Now worth an estimated $30 billion, the money is invested in stocks, bonds and real estate and the state pays out dividends, which are calculated using a formula based on the average earnings of the previous five years.
The only requirement for receiving the dividend is that you must have been a resident of the state for at least a year from the day you apply. The application date is Jan. 2 to March 31.
Alaskans have been receiving a check every year since 1982, when the first checks were issued for $1,000. This year's payout is the smallest since 1988 when Alaskans received a check for $826.93. The dividend has shrunk every year since hitting a record high of $1,963.86 in 2000.
The annual infusion of cash is viewed as a bonus by many residents, who use the extra cash to book vacations, put down payments on cars, four-wheelers and snowmachines, pay off credit cards, buy new computers or pay heating bills.
In a news release this week, though, Murkowski urged Alaskans "to think about the wise decisions made in the past that have resulted in these checks today."
"Parents have a unique opportunity and an important responsibility when determining how to use their dividends and the dividends of their children," Murkowski said. "Ultimately, it is a parental decision. Some families need the dividend to meet basic needs, others can save the dividend for their children's education. No matter what the family circumstance, I would encourage parents to use the dividend in ways that provide the most benefits for their children."
That's not Compeau's view. He offers PFD deals on both snowmachines and boats.
"The PFD is the lever we use to get them to think about it," Compeau said.
As for people who are contemplating using their dividend check to book a cheap trip to Hawaii - Hawaiian Vacations is offering two tickets for one PFD check and a six-night stay in Maui for as low as $669 - Compeau said a new snowmachine or boat will provide more enjoyment in the long run, even if it takes a few more dividend checks to pay it off.
"I tell people, 'You spend it on a trip and it's gone when you get back,"' he said.
One thing some people might burn their PFD checks on this year is heating oil due to the rise in fuel costs. Customer service representative Emma Lee Grennan at Sourdough Fuel said she took orders from two callers last week who requested an Oct. 12 delivery to coincide with the PFD direct deposit. Business spikes every year when PFD checks come out, but Grennan suspects more people may put their checks in gas and oil tanks with the higher prices this winter.
"With the high price of oil, that's where peoples' checks are going to go," she said. "Fewer people are probably going to be buying luxury items."
Craig Wisen, an assistant professor of finance at the University of Alaska Fairbanks, agreed that the high price of oil and gas could hurt retailers this PFD season.
"I think the unexpected increase in energy prices has more than taken away that $800 in terms of the cost when it comes to heating your home and filling up the gas tank," he said. "If you're a retailer selling snowmachines I don't think you're going to be as successful."
While he doesn't like to hear that, Compeau is also realistic.
"I think a lot of people are going to hunker down and pay bills," he acknowledged.
For banks and credit unions, the PFD payout means a busy few weeks.
"Our lobby will increase in activity for the next few weeks, through the time they issue checks," said Patty Mongold, senior vice president at Mount McKinley Bank.
With almost 5,000 account holders slated to receive today's direct deposit, Mount McKinley will take in more than $4 million, Mongold said.
"The question is how much do we retain?" she said.
While some people invest the money in children's education funds or retirement accounts, they do not represent the majority, she said.
"Some people spend it right away," Mongold said. "We'll see an increase in activity of ATMs and debit cards. There will be people at the drive-up window when we open at 9 a.m. waiting to make a withdrawal."
That's one of the reasons the staff will show up at 7 a.m. today, Mongold said. Inevitably there are some accounts that reject checks for one reason or another.
"Our staff comes in at 7 a.m. to make sure we get all corrections made so people can get their money when we open," she said.
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