The justices acknowledged the playground resurfacing issue was more than meets the eye.
"This church-state divide, it's a fraught issue. It's a hard issue," Justice Elena Kagan said, also calling the case a "clear burden on a constitutional right."
A crowd, including handfuls of children, gathered outside the court and those favoring the church position held aloft balloons that spelled out "play fair."
During the 70 minutes of arguments, Justices Ruth Bader Ginsburg and Sonia Sotomayor didn't seem to buy the church argument.
Sotomayor said: "This church is not going to close its religious practices or its doors because its playground doesn't have these tires. So I'm not sure how this is a free exercise question, because there is no effect on the religious beliefs. No one is asking the church to change its beliefs."
One reason cited for preventing the church from getting the grant funding is the Blaine Amendment in the Missouri Constitution, and in 36 other states, which bars public money from going to churches:
The amendments date back to the 19th century and are named for Rep. James Blaine of Maine, who tried unsuccessfully in 1875 to have the U.S. Constitution prohibit the use of public funds for "sectarian" schools.
When Justice Samuel Alito brought up the state amendments, he asked if they were based on "anti-Catholic bigotry?"
Cortman, an attorney with Christian religious liberty group Alliance Defending Freedom, said history shows "anti-Catholic bigotry that's behind this specific provision," but the establishment clause was really what was being argued here.
The Lutheran church said its exclusion from the program violated the Constitution because it discriminates against religious institutions, but the state has argued that Constitution's free exercise clause does not require the government to subsidize churches or provide equal funding opportunities for religious and nonreligious groups.
In 2015, the 8th U.S. Circuit Court of Appeals upheld the state's decision to deny the preschool's grant application.
The case has been a longtime coming to the Supreme Court which agreed to hear the case more than a year ago, a month before the death of Justice Antonin Scalia. The court, which has been divided on separation of church and state questions, is now back to a full bench, with the addition of Justice Neil Gorsuch just days before the oral arguments in this case.
Gorsuch, in his first week on the court, was viewed as a key supporter for the church in this case since he ruled in favor of religious freedom in 2013 on the U.S. Court of Appeals for the 10th Circuit, siding with Hobby Lobby stores that fought against the contraceptive mandate of the Affordable Care Act.
The new justice did not ask any questions until near the end when he asked Layton how the "discrimination on the basis of religious exercise is better in selective government programs than general programs."
On religious discrimination, he said: "There's no -- no line-drawing problem there. We know that's happened in this case, right?" He also pointed out later that "the line is moving."
The playground case almost didn't make it to court, because just days before the oral argument the state's new Republican governor, Eric Greitens, reversed the state policy and said churches would be eligible for the type of grant the Lutheran school sought in the future.
The court asked both sides April 14 to submit their views on whether the case should move forward and they both agreed it should. With the new twist, the Missouri attorney general's office recused itself and asked the former state solicitor general to defend the state's position.
The case began five years ago when the school applied for a grant reimbursing nonprofit groups for the cost of purchasing and installing playground surfaces using recycled tires. The program is funded from a fee on the sales of new tires meant to reduce the number of tires in the state's landfills and provide safe playground surfaces.
Missouri's Department of Natural Resources, which administers the playground resurfacing program, ranked Trinity Lutheran's grant application fifth out of the 44 it received. The department, which funds 14 grants, denied Trinity Lutheran's application because the state constitution prohibits state funds from going "directly or indirectly, in aid of any church, sect or denomination of religion."
The U.S. Conference of Catholic Bishops filed an amicus brief supporting the preschool, joined by the Missouri Catholic Conference, the National Catholic Educational Association, the Church of Jesus Christ of Latter-day Saints, the General Synod of the Reformed Church in America and the Salvation Army.
University of Notre Dame Law professor Richard Garnett said separation of church and state "is supposed to advance religious freedom, by keeping the government from interfering in religious affairs; it is not supposed to be a warrant for crude discrimination."
"The Missouri provision, and many others like it, reflect a deep and pervasive, but regrettable and misplaced, hostility to the Catholic Church and to Catholic schools. This hostility was prevalent in 19th-century America, but there is no reason its influence should continue to block initiatives that serve the common good," he added.
A decision in Trinity Lutheran v. Comer is expected by late June.
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Follow Zimmermann on Twitter: @carolmaczim.