The Financial Facts From Palin's Alaska

Sarah Palin recently expressed surprise that voters could be so curious about her home, telling Katie Couric in an interview, “Alaska isn’t a foreign country…believe me, Alaska is like a microcosm of America.” Sure, it’s her home, but it’s undeniable that there are some elements of life in the coldest state that are distinctly different than down south.

Chances are, if you don’t have moose stew on the menu for tonight’s debate party there are some still some surprising elements of Alaskan life.

Dividends
You may have heard about the Alaskan dividend checks, which are widely misunderstood as a payout from oil companies. The Alaska Permanent Fund was created in 1976 after North Slope oil entered the market via the Trans-Alaska Pipeline system. Written into the state constitution, the fund is like a mineral-based stock portfolio for the entire state. On paper, each year 25% of the profits from mineral industries are paid into the fund, although this works out differently due to property taxes and other factors. Since 1976 the fund has grown from $750,000 to more than 40 billion. Talk about an investment return.

So, where do the checks come in? Each year every man, woman and child in Alaska who has lived there for at least one year, and is not a convicted felon, receives a Permanent Fund Dividend, widely known as a PFD, based on the fund’s value over the past five years. In 2005 Alaskans banked $845, while this year they’ll each deposit $3,269, although $1,200 of that is a one-time Alaska Resource Rebate – basically a state program to compensate for high-energy prices in a very cold place.

Travel
Although travel to and from Alaska isn’t cheap, the dividend checks, which have been handed out every year since 1982, have inspired one of the biggest airfare sales in the country. Alaska Airlines (STOCK QUOTE: ALK) offers specials each year from early September, when the first checks are auto-deposited, through mid-October. This year’s sale runs until October 13. The other major airlines that offer service between Alaska and the lower 48, namely Northwest (STOCK QUOTE: NWA) and Delta (STOCK QUOTE: DAL), have followed suit with additional sales. Dottie Fischer, owner of Alaska’s Best Travel in Kenai, says this year’s sales offer about a 25% savings.

And while the discounts used to be open to Alaskans only, these days anyone can buy. “Our sportsmen visitors look forward to it every year,” Fischer notes.

The Cost of Dinner
There’s no denying that Alaska is a fishing and hunting paradise for all those vacationers, but it’s not just sport for most residents. Wages are relatively high in the state; a 2005 study by the American Federation of Teachers found that the average teacher’s salary in Alaska was $52,500, about $5,000 more than the $47,600 national average. However, those great wages are eaten up by the high cost of living, especially when it comes to food.

An ongoing survey of food costs from the Co-operative Extension Service of the University of Alaska, Fairbanks reported in June 2008 that weekly food costs for a family of four, with children ages 6 to 11, ranged from $118 in Wasilla to $323 in Kotlik, on the west coast of the state. (No word on whether the Palin family was included in the Wasilla survey.) The survey compared those results to Portland, Ore., where the weekly cost for a family of four was $107. Overall, prices around Anchorage and Wasilla, on the Kenai Peninsula and close to transportation hubs, were much lower than isolated regions that require small cargo planes for deliveries.

Alaska has an incredibly short growing season, so most vegetable, fruits and other crops have to be shipped in. And cattle have no love for tundra grasses, or arctic winters, although the Aleutian Islands are turning out limited amounts of Alaskan beef. Overall, according to the USDA, only 900,000 acres of Alaska’s land is farmed. Compare that to the lesser populated Wyoming, where the USDA reports 34,400,000 acres of farmland. Ranches and livestock are included in both estimates.

The good, and recently much reported, news is that Alaskans eat a lot of wild game as a result of high food prices in the grocery store. The Alaska Department of Fish and Game estimates that rural subsistence consumption is approximately 354 pounds of food per person, per year, much of it in fish form. Proof positive that Palin still has more to tell us about her candidacy and the state she governs – although the moose question has been thoroughly covered, we still have no idea where she stands on salmon and halibut.