State of the City speeches can be as much pep rally as substantive discussion. They do, though, give mayors a chance to talk both about progress and problems. And while Mayor Bob Duffy undoubtedly will address both in his State address tonight, the serious stuff is in the problems.

We've had plenty of good news recently; Paetec's headquarters, the Rhinos' rescue, more downtown housing development.... But this city's problems are enormous, and our resources for dealing with them are limited.

One of the toughest decisions city officials face right now is how to spend the Community Development Block Grant funds. The mayor is recommending focusing it on "tippy" neighborhoods, areas that with help might move from borderline-stable to stable. That would mean that some of the neighborhoods with the most severe problems would get less money.

That's already setting off tension among City Councilmembers, and it's certain to set off disputes among neighborhoods.

One of Duffy's numerous skills is leadership. This dilemma will test him in ways he hasn't been tested before.

(Duffy's speech is at 7 p.m. R News and City Cable 12 are telecasting it; WXXI-AM is broadcasting it. XXI's coverage will include post-speech analysis.

Campaign watch: So Mark Penn's gone. Sorta.

Hillary Clinton's chief strategist resigned - or was forced out - over the weekend after the Wall Street Journal's disclosure that Colombia had hired him to push a trade treaty that Clinton opposes.

Clinton apparently didn't know about Penn's Colombia connection. But as the New York Times notes this morning, this hasn't been Penn's only problem. The public-relations company he heads, Burson-Marsteller, has represented Countrywide, which has been in the thick of the news about the nation's mortgage, problems. The company also represented Blackwater, the military contractor in Iraq.

You could argue that a job's a job, and employees of public-relations companies don't have to personally endorse the policies of the firms they represent. But Penn's contract with Colombia is astonishing. He was hired to influence US policy. And he was working - at the same time - for a candidate for the US presidency.

Other Clinton staff have been arguing for months that Penn should go, saying that he hadn't given Clinton good campaign advice. And some Clinton advisers have blamed Penn for the harsh negative attacks Clinton has lobbed at Obama. Clinton kept him on until the Colombia news broke.

So now he's gone.

Sorta.

He will, though, according to media reports, continue to do some polling for Clinton's campaign. That suggests that he's not nearly gone enough, and that he will still have Clinton's ear.