GIRDWOOD, Alaska — Julie Pederson said she always believed her longtime neighbor, former U.S. Sen. Ted Stevens, was the victim of a witch hunt and innocent of corruption charges brought against him by the Justice Department.

“We knew it all along,” Pederson said after the federal government Wednesday moved to dismiss the case against Stevens. “Unfortunately, it’s a little too late.”

Pederson is among Alaskans who believe Stevens’ conviction last October was a lethal blow to his bid for re-election after 40 years in office.

The election outcome won’t change with the decision of Attorney General Eric Holder to dismiss the indictment against the Alaska Republican and not proceed with a new trial.

“If they had done that before, he’d still be senator,” Bob Sloan, a non-denominational church pastor, said at an Anchorage coffee shop.

Not all Alaskans agreed with the Justice Department’s decision to drop the case, the news of which created a buzz across the state.

“It’s disgusting,” said Jim Murphy, a longtime Stevens supporter until he was charged.

“Clearly a jury thought he was guilty. He was judged by his peers, but somehow wielded his influence and power,” Murphy said. “I just think the average guy would be sitting in jail right now.”

The 85-year-old Stevens was indicted last summer on charges he lied on Senate disclosure forms to conceal gifts and renovations at his Girdwood home from Bill Allen, the former head of VECO Corp., a now-defunct oil field services company.

Stevens, the longest-serving Republican in the Senate, had asked for a speedy trial, and was convicted a week before the November election. He returned to Alaska to campaign, but the fiery senator looked haggard, lacked his signature bluster and lost the election to Democrat Mark Begich in a close race.

The Justice Department court filing follows a case tainted by problems — including misbehavior by prosecutors — both during Stevens’ trial and after he was found guilty by a jury.

No one answered the door at Steven’s Girdwood home but residents in this ski resort town 40 miles south of Anchorage rushed to his support Wednesday.

“I think it’s awesome,” said Chris Roberts, a 20-year resident who is a snowmobile tour operator and gift shop owner. “How could you not like a guy with the nickname of ‘Uncle Ted.’”

“I think they should get rid of Begich and get Stevens back in. The only reason Begich won was because of the unjust words said against Ted,” said Judy Basler, a 33-year resident of Girdwood. “You wouldn’t do that to your grandpa. He’s like the grandpa of our state.”

Mike Tibbles, Stevens’ campaign manager last year, said he feels relieved, but also outraged.

“Just watching this, and the misconduct that has gone on, to me seems unbelievable, but this is a step in the right direction,” he said. “I just feel sad for Senator Stevens that this has been able to happen to him and have such a negative impact on his life.”

Gov. Sarah Palin, like many in both political parties, had called on Stevens to step down after the jury conviction. But she sympathized with his plight in a statement Wednesday.

“Senator Stevens deserves to be very happy today. What a horrible thing he has endured. The blatant attempts by adversaries to destroy one’s reputation, career and finances are an abuse of our well-guarded process and violate our God-given rights afforded in the Constitution,” she said.

Begich released a short statement saying he always maintained that Stevens should not serve time in jail and that Wednesday’s action likely ensures that is the case.

“It’s time for Senator Stevens, his family and Alaskans to move on and put this behind us,” Begich said.