Responding to an inquiry from a state legislator, Ken Cuccinelli, the new Attorney General of Virginia has issued a 5-page opinion (pdf) on the constitutionality of Christmas holiday displays on government property, including those "depicting the birth of Jesus Christ." His conclusion? It depends.
Although the inquiry is necessarily fact-specific, a holiday display that is not exclusively religious and one that is a part of a broader celebration of the holiday season would satisfy the Lemon test.
In sum, although it is certainly possible for a locality to violate the Establishment Clause by exhibiting or authorizing Christmas and other holiday displays, such displays are not per se impermissible provided that the County is careful with respect to content and context.
Elsewhere in the opinion though, Cuccinelli can't resist an effort to water down the Establishment Clause, suggesting that the phrase "respecting an establishment of religion" was aimed merely at laws "designed to maintain a state church, including provisions requiring church attendance and prescribing modes of worship." (p. 2)
Brent Walker, in his Answering the Top Ten Lies About Church-State Separation, addressed this sentiment well. It's #5.
Anita Kumar has more on Cuccinelli's opinion at her Washington Post blog.
