It doesn't count as an empty threat if they pull the trigger:
The Catholic Archdiocese of Washington has ended its 80-year-old foster-care program in the District rather than license same-sex couples, the first fallout from a bitter debate over the city's move to legalize same-sex marriage.[...]
The church and some experts said the city's measure has narrower exemptions for religious groups than other same-sex marriage laws across the country, particularly when it comes to requiring benefits for the same-sex partners of employees.
City officials knew of no other faith-based groups that said their city contracts were in jeopardy.
I do have to say I'm surprised - I thought they were just bluffing back when they threatened to pull out of so-called charity programs (it doesn't strike me as all that charitable to get a government contract to perform a task and then to perform it in exchange for money. Most people call that contracting). Not that it matters; their caseload (and district funding) was transferred to a Baptist charity* that doesn't seem to have a problem with providing those benefits:
Catholic Charities, which runs more than 20 social service programs for the District, transferred its entire foster-care program -- 43 children, 35 families and seven staff members -- to another provider, the National Center for Children and Families. Tommy Wells (D-Ward 6), the D.C. Council member who chairs the Committee on Human Services, said he didn't know of any problems with the transfer, which happened Feb. 1.
In addition to foster care, the center runs programs in Montgomery County and the District for homeless families and victims of domestic violence.
The marriage bill, which was approved and signed in December, is expected to become law in the next couple of weeks if it clears a congressional review period.
Catholic Charities, which receives $20 million from the city, had sounded alarms in the run-up to the council vote, saying programs serving tens of thousands of people were in danger. Being forced to recognize same-sex marriage, church officials said, could make it impossible for the church to be a city contractor because Catholic teaching opposes same-sex marriage.
Well then so be it. The entire idea of paying churches as if they were contractors of the government and then allowing them to be exempt from government regulation was silly in the first place. They aren't supposed to proselytize with the money, but, as American Catholics insisted back during the debate on the Stupak amendment, money is fungible and tax payers should be sure that they're not even indirectly paying for something they disagree with. By that logic, giving a church funding to run a charity it would be doing anyway only means that they'll fund it less and move the money over to proselytizing, so taxpayers are paying for Catholic proselytizing.
And if they don't even have the basic decency to follow civil rights law, the same laws any secular contractor would be forced to follow, then they don't deserve government funds to do government work. If they really are so charitable, let them raise the money themselves to help children.
The article says that Catholic Charities is going to try to keep their other programs open by finding away around marriage law, like just not providing benefits to same-sex couples that they would offer opposite-sex couples:
Edward Orzechowski, president and chief executive of Catholic Charities, the archdiocese's social service arm, said the group is optimistic that it will find a way to structure its benefits packages in other social service programs so that it can remain in partnership with the city without recognizing same-sex marriage.
Asked if that meant looking at ways to avoid paying benefits to same-sex partners or ways to write benefits plans so as not to characterize same-sex couples as "married," Orzechowski said "both, and."
I don't know why they couldn't do that with their foster care program, so I'm guessing there's no real way to deny same-sex couples benefits and not run afoul of anti-discrimination laws. Life's so complicated, but maybe the easy way out would be to just provide the extra two or three people health care and not complain about how it's a violation of their freedom to not be able to leave gay people without health coverage.
*Matt pointed out in the comments that the National Center for Children and Families isn't Baptist anymore. Here's their "Statement of Principle":
Our commitment to the mission of NCCF is informed and strengthened by our Judeo-Christian values and Baptist heritage.