yes!
They can make NO LAWS but letting people have a Christmas tree or putting the 10 commandments (good rules to live by0 in a building are NOT ‘creating laws’
It goes further than that. Not only does the First Amendment NOT forbid a government entity from openly celebrating Christmas or putting up the ten commandments...it actually forbids the Federal Legislature from making any law to stop a local government from doing so. I don’t think the founders anticipated they had to explicitly state that the federal courts were not to pass such laws in the Bill of Rights (rather some argued that the Bill of Rights was already all implied anyway) since the courts are not supposed to pass any laws at all but only apply them.