Not an expert here, but I am going to suggest that there is an important difference between a cultural display (Pride Month) and a religious display (nativity).  Religious displays run the risk of violating separation of church and state as required by the First Amendment to the US Constitution, while cultural displays do not.     

ALA's website (http://www.ala.org/advocacy/intfreedom/librarybill/interpretations/religion) seems concerned only with the availability of religious materials in the library's collection, but not with religious displays on library property.  But maybe a closer reading would reveal more.

This site gives arguments on both sides:  https://aclu.procon.org/view.answers.php?questionID=000691.  The debate centers on whether or not a religious display on public property amounts to favoring one religion over another, which would violate the Constitution.