The line may be "thin," but the real problem is that you put it in the wrong place.
Your editorial opposed public funding for a Museum of Tolerance commemorating victims of the Holocaust because the museum is sponsored by a religious organization.
For some reason, the rest of the country seems to have a different understanding of the doctrine of separation of church and state, than does California. The idea is to prevent a state religion from imposing itself on others. It is to keep the state from directly promulgating a particular religion.
That does not mean that any project that has the involvement of a religious group or clergy is off limits to the state.
In New York, for example, religious private schools receive many millions of government dollars for such things as textbooks, transportation and special educational programs, in their secular departments. This has not resulted in a church takeover of state, but rather in a flourishing of religious and cultural pluralism.
For the state to divorce itself from a project to memorialize victims of genocide because it may be sponsored by people who have an affiliation with a religious institution is as absurd as disqualifying the state from participation in a civil rights program because it is sponsored by Southern Baptist ministers.
It is as absurd as calling the Wiesenthal Center's laudable attempt to remind us all "what can happen when madmen seize control," a "denominationally religious" project.
Perhaps it is time that we too in California take a practical approach to church-state issues, one that, as Chief Justice Warren Burger wrote, will guarantee religious freedom by both passive "tolerance" and active "accommodation."