If they're in receipt of any kind of public funding, then it ought to be withdrawn.
In an indirect way, churches (as well as all charities) do receive public money.
Under US tax law, charities are tax-exempt organizations. Donations to charities are deductible by the donors on their Federal income tax returns.
Economically speaking, tax exemptions and deductions are essentially a form of government subsidy. Another way of looking at it is that the government is essentially imposing a tax on organizations that aren't charities and people who don't make charitable donations.
There are some people who advocate getting rid of both tax-exempt status for all charities and charitable deductions:
1. One can argue that a donation is a form of personal consumption no different from, say, buying a book. In both cases, the "consumer" is spending money to make him/herself happy.
2. This way, atheists don't have to worry about subsidy going to churches, anti-abortion advocates don't have to fret over subsidy to Planned Parenthood, carnivores won't see subsidy to PETA, etc.
ETA:
Sorry about the derail into tax policy.
But back to the original post. As offensive as this church's policy is, I'm glad this came out. It's good to have more transparency re people's views. This way, the consumers (churchgoers) are better informed and they can decide whether to attend this church in the future.
