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Anchorage, Alaska • Buy an iPhone 5 or replace the leaky rain gutters? Splurge or save? Ah, the tough choices that befall Alaskans every year, when they get their dividend checks from the state's oil savings account just for living here.

State officials said Tuesday that eligible Alaskans will receive $878 this year. That's significantly less than last year's dividend of $1,174, which was the smallest since 2006. The payout will be distributed Oct. 4.

The Alaska Permanent Fund Corp. last month suggested residents could expect a smaller dividend this year.

CEO Michael Burns has said the formula used to calculate the dividend will stay depressed until officials can stop using performance from 2009, when the fund recorded its first net loss in the statutory net income.

Like others surveyed in rural parts of the state, Sina Takafua, from the northernmost town of Barrow, plans to use her first-ever Alaska Permanent Fund dividend to pay bills. That way, she said, she can free up paychecks from her job at the local fur shop and get her Christmas shopping done early.

Some of her customers, on the other hand, are going for some warmth — and style. They're already pre-ordering parkas made of caribou, wolverine and other furs.

"They're waiting for their PFD to pay for them," said Takafua, who moved to Alaska from Maui, Hawaii, with her two sons in 2010. Her husband joined the family later, so he's not yet eligible for a dividend like they are.

New residents must live in Alaska for one calendar year to benefit from the permanent fund, which was established in 1976 after North Slope oil was discovered.

The state began doling out money from the Alaska Permanent Fund in 1982. Residents who have received every check since then have gotten a total of $34,243. 41, officials said.

This year's lower check amount was no surprise to fund officials.

The amount of investment earnings allocated to dividends is based on a five-year rolling average of Permanent Fund performance. Dropping from the five-year rolling average this year was 2007, a recent high-water mark in which the fund earned $3.4 billion in statutory net income, the realized gains used in calculating the dividend. Staying in was 2009, during the recession, when the fund recorded its statutory net income loss.

Alaska has no state income tax, but residents must pay federal taxes on the bounty. Still, it's free money for every eligible man, woman and child. Don't expect anyone to balk at it.

In the western town of Nome, many residents are using the money to pay for outrageously expensive groceries and gasoline, which sells for almost $6 a gallon. Gone are the days when people spent their dividend checks on snowmobiles from Morgan's Sales and Service shop, said fourth-generation owner Pat Johanson.

The money that goes to Johanson's four children will end up in savings. But Johanson's plan for his own check depends on how winter fares compared with last year, when temperatures were more brutal than usual.

Johanson, his wife and kids could have a vacation in the near future.

"If January gets to 30 and 40 below again," he said, "I want to go to Hawaii."

So does Sean Irvin of Anchorage. He went there on last year's dividend and wants to go to Maui with this year's money.

Still, there he was at an Anchorage Best Buy, eyeing another PFD treat — no, not the new iPhone coming out Friday, but a humble phone for a landline.

"I want big buttons and caller ID," Irvin said.