The Rochester Ferry Co. Chronicles: Part III – What’s Next?

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So what’s next for the Rochester Ferry Company?

Does it remain a sort of front organization for the city – working only as a way to keep the ferry debt invisible to a "constitutional" limit?

Or is there something more for it to do?

Perhaps it hinges on what the newly-minted Mayor Bob Duffy and the long-time City Council President Lois Giess decide about the board make-up. Should the two loosen up restrictions on board membership – and get the rest of the City Council to agree – maybe real advisors from the business world can populate it.

A group of people schooled in business practices would make sense. But then maybe we could call it what it really ought to be called – an advisory board.

But there is another potential use for this organization. And it stems from the idea of finding other sources of financial support. Everyone from Duffy to outgoing Mayor Bill Johnson to Current City Councilman (and Ferry Company President) Ben Douglas talk about involving other governments in supporting this service.

And why not. Duffy talks about how it can get Canadians to the Finger Lakes wine country and the outlet malls in the region. There is plenty of talk about how the ferry can carry people to Monroe County’s premier golf courses. And, frankly, there is more of an idea that it will take Americans to Toronto then the other way around.

So if outlying counties, outlying towns and the largest metropolis of Ontario are seeing the benefits – why can’t they pony up a little cash. Maybe Duffy sees it this way.

And maybe Duffy could use the Rochester Ferry Company as a first enticement to outside governments. He could invite in officials from potential "governmental partners" and give them a seat at the table… allow them to make some decisions.

But, of course, reality could also rear its ugly head here too. After two awful financial years behind this ferry venture… and with the city on the hook for potentially $51.5 million (and only a boat worth maybe $25 million as the sole asset) potential "partner governments" could politely say no and then run as fast as they could from the offer.

In other words it would take a large sales job.

And so we’re left with a few things: As things currently stand – the Ferry Company IS the city. And there is still a whopping debt left out there on a boat that has so far done nothing but drain away money. And it won’t be the Rochester Ferry Company that pays it off. It will be city taxpayers.

Odd Jobs

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Since Bob Duffy stepped down as police chief to run for mayor, we’ve had one man named to replace him who held the "interim" tag. Now we have another.

The first one – Cedric Alexander – never spoke about whether he wanted the job full time (although Republican mayoral candidate John Parrinello said over and over again that he wanted Alexander – and pushed Duffy to say likewise, something he never did). Alexander took himself out of the running almost immediately – taking a state level position.

Now comes the second short-term chief. Duffy said that Tim Hickey is only interested in helping him along with a transition to a full-time chief. It appears to be a shame, considering Hickey’s long track record.

And to think that outgoing Mayor Bill Johnson said that his appointment to replace Duffy came down to a tight choice between Duffy’s two former deputy chiefs – Alexander and Hickey.

This must mean Duffy wants to go beyond the city borders.

Then came the announcement that Molly Clifford has been named administrator for the Neighborhood Empowerment Team offices or NET.

Clifford will inherit an office that took an awful beating over 2005… from charges during the campaign that it was a waste of money… to protests that said NET is unfairly enforcing laws that were meant to stifle nuisance businesses.

Clifford has a history of inheriting organizations in a tailspin. When she became head of the Monroe County Democratic Committee, in late 2002, there were feuds a plenty in the party. And when she left in early 2005, those fissures still remained.

But Duffy said that his former campaign manager has "incredible skills in bringing people together and leading a team." She’ll get a second chance at flexing those muscles with NET.

The Rochester Ferry Co. Chronicles: Part II – Why is it there?

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Why does the city even have a Rochester Ferry Company? The answer most often voiced is that it keeps the ferry debt off the city’s debt ledger.

Why’s that important? Is that enough to have this agency in place?

Well, first understand that the Rochester Ferry Company acts as a middleman  for ferry funding.

The company took on a $40 million loan from the Australian Export Finance and Insurance Corporation, bought the boat at auction for $32 million, and stashed away the rest in a reserve.

But while the company took on the loan, the city guaranteed the payback. And why not. Remember who the Rochester Ferry Company really is.

Now comes the latest call by the city leaders to borrow another $11.5 million for the service.

The Rochester Ferry Company plays its middleman role here as well. The city uses the Ferry Company in a roundabout way to get at the money. It’s called a leaseback agreement. The city will "lease" the ferry from the Rochester Ferry Company.  Then the city will "lease back" the boat to the ferry company.

The lease agreement makes the city liable for the paying back the $11.5 million loan that the ferry company takes out. Sound familiar?

Sure it does. The company is the city. So, why bother with having this company at all? Why doesn’t the city just borrow the money itself?

The reason, says outgoing Mayor Johnson is it keeps the borrowing off the city’s constitutional debt limit. In a presentation he gave on the ferry project in Boston last summer, Johnson was rather candid on what he viewed as the perils of putting the debt on the city’s ledger. "We would have to spend less on housing and economic development projects, as well as maintenance of streets, parks, and other public infrastructure, in order to raise enough money to buy the boat," he said at this Boston gathering.

Seems reasonable on the surface. That’s $51.5 million in debt on a single project – a risky project. According to the city’s budget book, Rochester has $305 million in bonds and notes that can be counted on its debt limit. Take away the borrowing for schools and you have $136.5 million for city-only debt.

That makes the ferry number look rather… substantial. Remember Ben Douglas, the president of the Rochester Ferry Company’s board, said that selling the boat would give them some money back, but only around $25 million.

So maybe keeping that ferry borrowing off the debt limit gives the city flexibility to borrow for other things.  But you might also say that this arrangement is like taking out a second credit card and claiming it gives you more flexibility to ring up more debt on your family. In other words, put the debt anywhere you like – it’s still debt the city must shoulder.

And here is a question worth pondering. Would any credit rating agency – like a Moody’s or a Fitch’s – ignore the $51.5 million in debt on the ferry even though it’s not part of the city’s constitutional debt limit? Or would they consider it when determining the overall health of the city?

So the Rochester Ferry Company’s role seems limited, doesn’t it?

Or could it be useful in other ways? Let’s tackle that in the last installment of this little series.

The Rochester Ferry Co. Chronicles: Part I – What is it?

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So much written, so much said about the effort to bail out the Rochester-to-Toronto ferry service.

And yet it’s not the City of Rochester that must approve $11.5 million in borrowing for the beleaguered boat. It’s up to an organization called the Rochester Ferry Company. Sounds like a separate entity from city government, right? Well dear reader let’s get at that notion right away.

It’s well worth asking – just who is the Rochester Ferry Company. It was conceived nearly a year ago. This was after the original private owners of the ferry – Canadian American Transportation Systems – showed a big loss for the big boat and closed shop early. The city created the organization to borrow $32 million to buy the ferry.

The oddity of the Rochester Ferry Company showed itself early on. Originally Mayor Bill Johnson wanted to create a not-for-profit corporation. IRS guidelines required that a not-for-profit have a large majority of the board of directors coming from the sponsoring organization. That meant the city. So that meant nine of the eleven people would be city elected or appointed officials.

But a funny thing happened on the way to the corporation. Upon further review, the city thought better of it. The city leaders decided, instead, to create a limited liability company. They changed the name from "corporation" to "company" and called the "board of directors" the "board of managers."

The Rochester Ferry Company was born.

And yet – even though the IRS regulation on board makeup no longer applied – the legislation creating the company still called for nine of the 11 members being city elected or appointed officials. Why? Inertia? Because it was easier to keep going without making changes? Or did the city want that many of its own on the board to keep the tightest possible control on the ferry operation? Johnson had plenty to say about it at the time.

Mayor Johnson and City Council President Lois Giess automatically had seats on the board. Johnson named five others. They were administration officials Ed Doherty, Loretta Scott, Bill Ansbrow and Jeff Carlson (Carlson was eventually replaced by another Johnson administration official, Linda Stango). Giess named four people to the board. And, as you might have figured, they largely came from the city council – Ben Douglas, Wade Norwood and Gladys Santiago.

The legislation also called for the mayor and council president to name one outsider… so Karen Noble Hanson and Charles Barrentine were appointed.

But make no mistake. The Rochester Ferry Company WAS and IS the city.

So when you read news accounts of how the ferry company board was loathe to provide information about the service (see Tim Mains quote)… when you heard that the ferry burned through an $8 million reserve… and when you realized it continued to operate when the bank account was empty — there was only one place to look.

The company is the city.

With the new year… and a new mayor taking office… there will be changes on this company’s board. Incoming mayor Bob Duffy gets Johnson’s seat. And Duffy has ousted Stango, Doherty and Scott. So he gets to appoint replacements. Giess must replace Norwood (who leaves the City Council after his failed run for mayor).

Interestingly enough, there is a movement afoot to loosen up restrictions on the board make-up, to allow fewer city officials. Duffy has said that Giess would like to appoint someone with business experience – an outsider – to replace Norwood. Duffy loves the idea and gives the impression that he would like to do the same. That would take a change of the legislation.

Don’t be surprised if you see that happening on January 5 when the City Council must approve Bob Duffy’s three appointments.

But until then – the Rochester Ferry Company is the city government.

So is the company needed? We get at that in part two of this trilogy.

Duffy and the Non-Partisan Potholes

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Hey, Bob Duffy.

Was that a Republican we saw you appoint to your administration on Thursday? I think the last time there was a Republican in City Hall was, what, Lonesome Charlie (scroll down for this entry). Or maybe Steve May?

Anyway, I’m referring to this new appointee, Paul Holahan. He’s your new commissioner of environmental services. He replaces a guy who has been in city government since the 1970s – the venerable Ed Doherty.

Oh, there were some hurt feelings among some in City Hall when you swept out the old. But frankly, anyone who was paying attention during the campaign should have realized that you were going to overhaul the city staff.

Anyway… I’m looking at this resume for Paul Holahan. He worked for Greece town government for years – that bastion of Republican politics. He worked for the Rochester Genesee Regional Transportation Authority, a place run by Don Riley, a former Republican town supervisor from Greece.

His last job was in Irondequoit. In the fall of 2004, Republican Supervisor David Schantz called his new public works commissioner an experienced and well seasoned management professional (check out page 2).

And now, here he is… in the Democratic bastion of Rochester.

How could it be Mr. Duffy? Bob Warshaw, your transition coordinator, said that Holahan’s party affiliation is "an irrelevent fact."

"There is no such thing as a Republican or a Democrat pothole," Warshaw said. I guess that if I had been paying attention during the campaign I would have realized that you would be reaching across boundaries and lines – even those political.

But here’s the real interesting thing… Irondequoit is going through its own transition. A Democrat, Mary Ellen Heyman, has led a Democratic takeover of town government, ousting Schantz in the  process. (We’ll have more on that transition soon).

Heyman said that she gave Holahan the chance to remain on in Irondequoit. He clearly turned that down.

"I’m disappointed," Heyman said. "But I’m not surprised he chose a different opportunity."

So who knows – maybe Paul Holahan simply sees this as a chance for a fresh start. Maybe he finds you, Mr. Duffy, a more acceptable Democrat. Maybe, as your staff has said, he could care less about all that party stuff.

It is interesting, however.

Oh, you want to know something else that’s interesting? You know who is advising Irondequoit’s incoming supervisor – Mary Ellen Heyman – on the transition? Ed Doherty… the venerable guy that Paul Holahan is replacing.

It’s enough to make your head spin.

And let’s not even get into the fact that you named a former aide to Rudy Giuliani as your deputy chief of staff. But, hey, there are no Republican lunch meetings or Democrat lunch meetings, right?

Appointment Blizzard

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It’s been a veritable blizzard of appointments by Bob Duffy.

One of them was hardly unexpected – but still leads to a rather pointed question.

Darryl Porter was named an assistant to the mayor, and will likely be involved in coordinating school-related issues for the Duffy administration. Porter is currently the Rochester City School Board president. And during the course of the year, Porter ran for reelection to the City School Board.

In fact, you may remember that for a time Porter was considering his own run for mayor. But he decided against it, then Duffy announced and Porter got behind him early on.

Now, per Duffy’s wishes, Porter will have to step down from an elected position he won’t have even started. Then the City School Board will have to appoint a person to fill his seat. That new appointed school board member will have to run in a special election in November.

Of course voters could have had the option to choose a school board member this past November if Porter simply would have decided not to seek reelection.

So what does Porter now say to those who cast a vote for him to stay on the school board a few months ago?

That he can do even more for school children, for the community, as an assistant to the mayor.

"They know that I’ve given 100 percent, 110 percent to that job… and that I’ll keep doing that in this new job. I’m not going anywhere," Porter said.

Porter said that he plans to make his choice for a replacement known to all. We’ll see how the voters of the city accept this person in the coming months.

The changes have been vast at City Hall, a rather predictable eventuality. And Duffy makes clear that he hears the critics of his transition. Some have complained (including outgoing Mayor Bill Johnson) that he’s letting too much experience go out the door. So Duffy makes clear to point out the history of his appointees, and their experience in the community.

Like when he announced Tom Richards as corporation council. Richards was the former CEO of RG&E and back in 2003 was considered a potential candidate for county executive. Duffy lumped Richards together with incoming deputy mayor Patty Malgieri when he spoke about people who have a long history in the community.

The Richards appointment may have been the biggest surprise of the week for most.

Those who work at WXXI may have been equally interested in the appointment of a new communications director – Gary Walker. 

For the last three plus years, Walker was my boss at the station. When he called, I had to respond. Now… when I call (or anyone else from the local fourth estate calls) he (or his staff) that must reply. Things do shift in strange ways, don’t they?

That reminds me a photograph in Walker’s office. It’s one that was taken fairly recently at some television awards ceremony. He’s standing next to Jeanine Pirro.

Back then she was the apple of the Republican Party’s eye and the presumed next opponent for Hillary Clinton.

Who would have figured that months after the photo was taken both Walker and Pirro would be looking at two very new jobs. The only difference is that Walker’s shift is far more congenial than Pirro’s.

Hints, Winks and Nods

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The season of transition has had many silly moments.

None more funny than during Mayor Bill Johnson’s press conference last week announcing the financial plan to keep the Rochester ferry service alive.

Questions came at Johnson about whether his successor, Bob Duffy, supported the idea of city-backed borrowing to the tune of as much as $11.5 million for the ferry service.

"I don’t want to put words in his mouth," said Johnson about Duffy. Then he pointed to the back of the room and said that one of Duffy’s "staff workers" was there – and that we could pose the question to her.

The woman in the back of the room was Patty Malgieri, sitting on a folding chair in the atrium of City Hall behind the reporters, a sheaf of papers on her lap.

I turned around and asked: "You’re a staffer?" "No, no," she said with a smile. "I’m just an observer."

A day later, Bob Duffy held a press conference of his own to announce a new appointment – Patty Malgieri as deputy mayor.

Hey, who can argue against the inevitable appointees acting coy until the new boss makes it official. Molly Clifford, the former Democratic Party chair and manager of Duffy’s campaign, has been long rumored to be getting some kind of high-level appointment. Ask her about it and the best she’ll give you is: "I don’t know the answer."

And I know that Mayor Bill Johnson has been lamenting the fact that Duffy hasn’t worked fast enough and that he hasn’t kept on more of his appointees.

The speed issue could be something to quibble with. But its hard to take the outgoing mayor as seriously on the idea of keeping on veteran managers. Some of the people that Duffy is letting leave have been around since the Tom Ryan years. The change was necessary.

But enough of the serious stuff. I’m sure we will have more of these silly, awkward moments in the waning days of this transition time.

The Ferry Pop Quiz

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All right class – time for a pop quiz. The topic, of course, the fast ferry of Rochester.

1) True or False – After a rough second year in 2005, Mayor Bill Johnson said last week that the new business plan for the ferry service is based on "conservative estimates." True

2) True or False – After a rough first year… and leading up to a purchase of the ferry in 2005, Mayor Bill Johnson said the (at the time) new business plan was based on "conservative projections." True.

3) City Councilman Ben Douglas, also the president of the ferry’s governing board, said last week that he would like which governmental entity to come up with an additional infusion of financial help for the ferry in the coming year.

a) the county government

b) the state government

c) the federal government

Answer is b)

4) True or false – A State Comptroller audit of financial practices by the original owners of the ferry – Canadian American Transportation Systems – is complete. And CATS was found to have no shady dealings. False, although State Comptroller Alan Hevesi said back in the summer that the investigation into the $14 million in state grants and loans would take "a couple of months" the status is that the investigation continues.

5) True or false – When Johnson talked about the city buying the boat a year ago – he said if the ferry business plan doesn’t work "we can get out of the business very quickly" and that "the boat can be sold in the open marketplace and most of the debt can be paid off." True.

6) True or false – Last week Councilman Douglas said as a way of justifying a new business plan after the lousy 2005 season: "if you stop operations, you still have a $40 million debt. You would have to sell the boat, and no one knows at this moment what the market might be for selling that boat and how much money they would see." True

7) In February 2005 two appraisals for the ferry vessel were given. The boat was found to be worth between:

a) $25 and $30 million

b) $30 and $35 million

c) $35 and $40 million

Answer is a)

8) The city’s winning bid for the ferry vessel was:

a) $22.5 million

b) $27 million

c) $32 million

Answer is c) – the city actually backed $40 million in borrowing through bonds. The rest of the money was a reserve for the ferry service – which is now gone.

9) The amount last week that Ben Douglas thought the city could get for the boat if it were sold:

a) $25 million

b) $32 million

c) $35 million

Answer is a)

10) Finally, please add the following: $40 million + $11.5 million.

That last answer, class, is the amount of money the city would back in total borrowing for the ferry project.

Those Awkward Transitions

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Transitions are so uncomfortable. They come when you’re leaving a job or selling a house, when you’re breaking up a marriage or graduating from school. Birth is the ultimate transition.

How about that first date… who really enjoys it? The small talk. The nervous giggles. The checking and rechecking of every comment. Exhilarating and painful at turns.

Transitions mark endings and new beginnings – and these moments in time are fraught with danger. So people watch what they do, how they act, what they say.

It’s understandable, then, that Bob Duffy sounds reserved in the days after his landslide election and before he assumes office. He talks about following protocol and reminds us that Bill Johnson still holds the mayor’s office. He does this as he assembles his own staff and prepares for the job.

But for now, he sounds like something of a bystander. Of course, the problem for transitions in government is that the government business keeps chugging along. Sometimes, the most crucial of decisions get made during this time.

Two years ago County Clerk Maggie Brooks had just vanquished the same Bill Johnson to become county executive. Republican Jack Doyle still had a few more weeks left on the job. The offices of the county clerk and county executive were on either side of the county office building’s entrance – separated by about 25 feet. But it could have been a mile with the way Brooks talked during that month of transition.

The twist was that Monroe County’s government leaders were in the midst of a tough budget negotiation. Legislators had received a budget from Doyle that called for cuts to services, and an idea to raise the county’s share of the sales tax. It was a watershed budget – and it was necessary to close a multi-million deficit.

The Republican-controlled county legislature amended the budget plan and raised property taxes by the highest amount seen in a decade. It did away with any notion of a sales tax hike and it included service reductions. In this one action – the legislature reversed a long standing policy position by the Doyle administration – to keep the amount raised by property taxes frozen.

Even before the county executive’s election was done public opinion-makers, like those at our daily newspaper, urged a close relationship between Doyle and whoever won the race.

And let’s not forget that the winner, Maggie Brooks, had campaigned vigorously that she would continue the property tax standard championed by Doyle. But then – as county lawmakers of her own party voted for this budget with tax hikes, and as Doyle contemplated a veto – Brooks went oddly silent. Instead she talked about how it "wasn’t her job to go across the hall."

Some saw that as being deferential to Doyle. Others, largely in the opposition Democratic Party, saw this as a way for Brooks to have her cake and eat it too. She didn’t raise the taxes, the county legislature did. And a year later, that’s what we heard.

But, in fairness to Brooks and anyone else in this position, her term didn’t really start the morning after her election. It’s truly an odd time.

Look at Bob Duffy. While he waits for Johnson to move out of the mayor’s office, the city government has allowed some big changes to a very public, government-sponsored project – the Fast Ferry.

The decision to shorten its schedule was made during the transition period. And now a decision to borrow another $10 million to shore up the ferry appears likely to happen before the first of the year.

Duffy’s stance? Well, during the campaign he tacitly supported the project (he was not nearly as well defined in his approach to the ferry as, say, Tim Mains).

And since his election, Duffy said that he’s been briefed twice on the ferry – once for 90 minutes by the mayor and once by the city council (before the election concluded).

In a recent interview, Duffy sounded very comfortable with that fairly removed position: "I’m very cognizant of protocol. There’s one mayor and one mayor only through December 31."

We can appreciate this posture. But a transition should be more involved than this. One would expect Duffy to be almost like a trusted advisor to Johnson on matters such as this. Sure, Johnson still calls the shots. But Duffy ought to articulate if he likes what he’s hearing… if he will continue on with the policy enacted before he took office… if he might change it after January 2.

Just as with the Doyle-Brooks changeover – we’re talking about two people from the same political party, so there shouldn’t be the hurdle of partisan politics.

It’s not a matter of stepping on toes. It’s about a smooth handoff.

I remember from my days running track in high school that a relay race requires the two runners to stay with each other for a time before the baton is passed. Sounds reasonable with issues like the ferry.

But that’s easy to say, coming from a guy who had more of his share of lousy first dates.

Minority Report

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The post-election season usually involves political shifting. That includes new people sometimes jockeying for leadership posts.

time the political sands shifted for minority leadership positions.
Stephanie Aldersley morphs into Carla Palumbo as the new head of the
Democratic minority caucus on the Monroe County Legislature.

Charlie Nesbitt fades away for Jim Tedesco as leader of the Republican minority on the New York State Assembly.

with these changes is one truth: These minority leadership jobs are
some of the toughest political tasks. Minority parties rarely impact on
policy through the legislative process. Sadly, the majorities in any
legislature are quick to bat down or table proposals from the minority
side. So the minority must represent the alternative voice. This can
happen in floor speeches. Or it can happen through the press.

other job for the minority leader is, quite simply, to marshal the
forces needed to increase the ranks and get closer to the majority. In
other words, this person is far more of a political leader.

heard two explanations for Palumbo for Aldersley swap for Monroe County
legislative Democrats. First, that a change is needed to keep the blood
flowing. Aldersley had the job for three and a half years, and, as
Palumbo explained, any organization worth its salt needs a fresh
approach now and again. Second, this change sets up better continuity
for the Democratic caucus because Aldersley – an eight year incumbent –
has only two more years before term limits force her out. Palumbo first
took her legislative seat after the 2001 elections.

But it
leaves out the political equation. During this year’s election,
Democrats county legislature maintained 12 seats on the 29-person
legislative body. But there was no increase of numbers. In fact, the
Democrats never got close to taking control under Aldersley’s
three-and-a-half year run as leader. Some will choose to blame
Aldersley. I would say that the Democratic Party in general has been in
such disarray over the last few years that no one would have been able
to make a difference.

But that political component becomes
part of the job. And the minority leader is sometimes like the coach of
a rebuilding football team that isn’t making any promise. The blame may
or may not lie with the coaching decisions, but the axe always comes
down on the coach’s neck first.

It is worth noting that
Democrats have found new hope after November. And it’s because of wins
in town and county legislative races in Irondequoit – a town that is as
much Aldersley country as it is O’Brien’s or new town supervisor Mary
Ellen Heyman’s.

But, in the end, the numbers of the caucus
needed to go up. And now it’s Carla Palumbo who will have the
responsibility for pushing them up.

Charlie Nesbitt, the Albion-based state assemblyman, can relate.

– who represents a portion of northwestern Monroe County – also held
the position of Republican Assembly minority leader. One supposes that
he could only look on with envy at Republican Senate Majority Leader
Joe Bruno, who wielded power and became known as one of the three men
in the room.

Nesbitt’s caucus was dwarfed by the Democrats
(lead by Sheldon Silver). The noise that he could make during, say,
budget season was puny. And Nesbitt had no luck in building up the
minority’s numbers and, in fact, was seeing the caucus lose seats
(right now Democrats have 105 seats to the Republicans’ 42).

came to a head earlier this year when Assemblyman Dan Burling announced
he would challenge Nesbitt for the caucus leadership. He told Karen
Dewitt, "We’ve got members that don’t feel this conference is taking
any direction."

Nesbitt withstood the Burling challenge. But
you had to wonder how much longer Nesbitt was going to hold on. For, in
the end, Nesbitt took the blame for the numbers even though the
Republican dilemma was as much a problem of redistricting, a process
that ensured the comfort of incumbents. As Nesbitt must know all too
well, when your team has far fewer incumbents, those incumbent
protection redistricting maps are really no help at all (something he
can thank Joe Bruno for as much as Sheldon Silver).

Nesbitt no longer has to worry about the growth of the minority now
that Gov. George Pataki has appointed him head of the tax appeals

Now Assemblyman Jim Tedesco of Schenectady must shoulder the leadership yoke. Just like Carla Palumbo will. 

Sounds like a rather thankless job, doesn’t it?