Does Berkeley Have the Right to Kick 'Em Out?

According to cnn.com, there is a heated debate in Berkeley, California over whether or not the city council has the right to kick marine recruiters out of their city. A marine recruiting office resides a block away from the college's campus where anti-war peace protests frequently are held. Apparently, these protests were taken seriously because a bill was passed to the council, and a law was eventually made stating that, "If recruiters choose to stay, they do so as uninvited and unwelcome intruders". This new law led to a showdown between pro-war and anti-war groups. The pro-war rioters claim that the actions of the council are "treasonous". Republican lawmakers in Washington have also threatened to withhold funds from the college and city.
I guess I was under the impression that this sort of lawmaking was protected by the constitution. Obviously, the marine recruiting office probably isn't doing too well if it is stationed a block away from Berkeley...one of the most stereotypically liberal colleges in America. How can withholding 2 million dollars of federal funding be justified? Why should a city and college simultaneously be punished for thinking differently than the politicians in the white house? If a citizen truly wanted to join the Marine Corps, Berkeley is in no way stopping them, just making it a little more difficult to get to the sign-up sheet. Americans should have to right to be pro-war or anti-war without fear of having their beliefs threatened.