While this is a fairly rare edge case, I found myself in a position where I was unable to decline a flag while not being able to use a mouse.
Trying to tab to the "decline" button skips right over it. The decline button should be able to be selected via tab, and then a reason chosen using the arrow keys or number keys, like other similar menus around the network.
If you're confused as to why it's important that things be accessible without the mouse, please read up on keyboard accessibility. While I thankfully don't have any physical problems with using a mouse, I'm using my time with a broken mouse to give accessibility feedback so that people who need it can get a better site experience.