PORTLAND – Each side asserts that it is acting in the interests of the public good. The city declares that it is keeping public money from funding discrimination. The charity contends that the city would have it violate its religious principles as it tries to serve the needy.

Neither side will budge, and now the city and Catholic Charities Maine are poised to clash in federal court over the latest expansion of domestic partner rights in Maine’s largest city.

Councilors amended an ordinance in June to require agencies that receive certain federal funds through the city to offer employees’ domestic partners the same benefits that spouses receive.

Catholic Charities protests that the ordinance is inconsistent with its religious teachings on premarital sex and homosexuality.

“It’s what I call designer discrimination,” said John Kerry, the agency’s chief executive officer. “They design a program which they know The Salvation Army, the Catholic Church, and maybe some Orthodox Jewish communities or maybe even some other Protestant religious groups would disagree with.”

Mayor James Cloutier said councilors wanted to encourage expanded health care benefits while combating discrimination.

“This is, in fact, discrimination,” Cloutier said. “It’s not the worst case of discrimination that ever existed because it’s subtle and it’s a little bit indirect, but it’s discrimination nonetheless.”

The ordinance is the latest step to expand the rights of domestic partners in Portland, the first city in Maine to approve a gay-rights ordinance. Councilors already approved a domestic partnership law that gives committed couples many of the same rights as husbands and wives.

Unlike broader laws in the San Francisco Bay Area and elsewhere in the West, Portland’s new ordinance affects only agencies that receive Housing and Urban Development Community Development Block Grants, not the entire range of entities that do business with the city.

The city disperses about $743,000 from those grants to 40 social service agencies and city programs each year, according to City Manager Joseph Gray. The programs run the gamut from soup kitchens to neighborhood associations and services for the homeless to drug programs, he said.

Catholic Charities, along with The Salvation Army, were the only two agencies to protest the ordinance, both on religious grounds.

After the City Council rejected its requests for an exemption for religious groups, The Salvation Army forfeited a $60,000 grant for its senior citizens center and a meals-on-wheels program.

Catholic Charities would have received $88,310 for two child care programs, homemaker services for the elderly and mental health programs. Those programs employ about 125 people.

It announced in December that it would sue rather than comply with a policy that runs contrary to religious teachings.

“There’s a fundamental principle that we wish to adhere to our ethical and religious directive. But also from a public policy point of view, we do not think the state has a right to dictate … to a private religious group the terms of a health care policy but certainly the values by which a religiously motivated institution operates,” Kerry said.

Catholic Charities also protested that the ordinance was applied inconsistently because there is no similar requirement for other contractors who do business with the city.

Cloutier said city officials are working on a measure that would apply to other kinds of contracts. He said he didn’t expect the ordinance would be a requirement but would “acknowledge the value” of equal benefits for domestic partners.

“If we had a procurement requirement [it would require] the investigation of company practices, that kind of stuff. That would be considerably more complicated and more burdensome and more difficult to do,” he said.