JUNEAU ­– A state court judge ruled Thursday that Gov. Bill Walker had the authority to reduce this year’s Alaska Permanent Fund dividend, siding with the state in the politically charged case.

Superior Court Judge William Morse’s decision followed arguments presented by both sides in Anchorage on Thursday morning.

Morse said he expected the issue ultimately to be decided by the Alaska Supreme Court. State Sen. Bill Wielechowski, one of the plaintiffs in the case, said he planned to appeal.

The lawsuit, brought by the Anchorage Democrat and two former lawmakers, argued the Alaska Permanent Fun...