Generic EpiRaise

A couple of weeks ago, Trenton’s Mayor Eric Jackson called himself “a chief executive officer of the capital city.” There’s a recent example in the world of business in which that comparison is not so far out of the realm of possibility.

Over the last couple of weeks, the Mylan Corporation and more specifically its CEO Heather Bresch, has come under an avalanche of condemnation over the drastic price increases the corporation is charging for its injectable epinephrine product, EpiPen. The price increases on that product, more than 400% since 2007, were criticized as being motivated by little more than corporate greed. As CEO, Bresch is the public face of the company, and the chief target of the public’s outrage. The fact that, in seeming lockstep with EpiPen’s product price, her salary increased, 671% in the same timeframe since 2007.

Faced with a firestorm of public criticism, how did Mylan and its CEO respond? How did she and her company attempt to defuse the situation?

With a classic bait-and-switch. Rather than admit to bad decisions attributable to corporate greed and reduce its price, Mylan announced a new, cheaper, “generic” brand of its EpiPen, with a price half that of its marquee product. The generic has the same drug with the same delivery system. It’s the same product, but it’s “cheaper,” see?

Reaction to this move hasn’t been kind. An article in Business Insider captures the mainstream response:

[T]his authorized generic of the EpiPen, a device used in emergencies to treat a severe allergic reaction called anaphylaxis, seems to be more confusing than anything else.

“I and others who study these issues full time cannot understand why Mylan thought this would work to quell the widespread indignation over its pricing practices,” Rachel Sachs, a law professor at Washington University in St. Louis, wrote in a Harvard Law blog post about how the company’s decision “baffles” experts.

Professor Sachs, meet Eric Jackson, Mayor of Trenton, New Jersey!

A few weeks ago, the Jackson Administration unveiled a proposal that would grant senior city officials including the mayor a retroactive – to January 1 of this year – 3-year 15% salary raise. City Council approved the first reading of the plan during its August 18, with the second reading and vote to adopt scheduled for September 15. The Mayor and Administration must have hoped this plan would have sailed through Council without much attention, appearing as it did as one item on a busy docket of City Council’s only August meeting.

However, the plan has been opposed. Several citizens, including myself, spoke against the plan at Council’s meeting. None spoke in favor. Since then a committee of citizens, including myself, has formed as the nucleus of an effort to conduct a petition campaign should the plan be adopted by Council, a petition that would lead to a special election to vote on a referendum to overturn the raises. Given the multiple and continuing failures of management and leadership as demonstrated by Mr. Jackson and his colleagues, I and we feel that 15% raises will in effect reward these people for their poor record in office.  As of this morning 135 persons, registered Trenton voters all, but for a handful, have signed an online petition pledging to sign such a petition should Council grant those raises. This opposition seems to affected “CEO” Jackson in much the same way as bad press and a dropping stock price affected CEO Bresch. Eric Jackson has backed off his 15% plan by “clarifying” it.

That’s the term used in the headline of a Trentonian piece by Penny Ray posted yesterday evening, and not the mayor’s word.  Mr. Jackson may as well have called this plan his “generic” raise proposal. “I’m proposing a 1.5 percent increase for each year because that’s the average increase the unions received,” the mayor told the Trentonian. This seems much more reasonable on first impression, constituting an approach that grants the kind of nominal, cost-of-living-adjustment (COLA) that I and other speakers at Council stated would be more reasonable and more acceptable.

But the devil is in the details, as it is with most things, and there are many details that remain to be explained here. For instance, Mr. Ray reports “Jackson’s proposed pay increases retroactively cover fiscal years 2015 and 2016.” That says to me that the revised, “generic EpiRaise” plan would be retroactive to two prior budget years. Meaning a 1.5% increase for Fiscal Year ending June 30, 2015, another 1.5% for the year just ended June 30 of this year, 1.5 % for the new budget year we are now in that started July 1. Since those increases can’t be charged to those prior fiscal years, the net effect of the new plan would be a 4.5% increase effective this year, and a 1.5% increase for the next fiscal year, the last one of the current mayoral term. So, to review, the revised EpiRaise proposal would total 6% over two budget years, effectively 3% a year.

This sounds much more reasonable, and 6% probably will be more palatable to squishy and easily-swayed Council members – who voted 5 to 1 in favor of the 15% raises last month, remember! – who will be expected to pass the plan next week. But, to paraphrase the good Professor Sachs, I and others who follow these issues cannot understand why Jackson thought this would work to quell the widespread indignation over its management practices.

If anything, the Mayor’s comments only reinforce how poorly he and his Administration have been leading this City over the last two years. The Trentonian’s account paints a picture, in Mr. Jackson’s own words, of a man very out of touch and way out of his depth.

Penny Ray reports in his piece “Mayor Eric Jackson said he previously asked McEwen to draft an ordinance increasing salary ranges for certain personnel because raises were last ordained in 2005. But he hadn’t read the memo McEwen attached to the ordinance until after the proposed increases were reported by the press. – [Emphasis added – KM]” He hadn’t read the memo?!?!? A plan that would proposed significant raises to:

• Himself;
• His Business Administrator;
• His Chief of Staff;
• His Department Heads;
• His Division Directors;
• City Council Members;
  
• The Chief Municipal Judge; and
  
• The other Municipal Judges;

and HE DIDN’T READ THE MEMO?? How can this be? Is it credible? Is he trying to say he was unaware of the size of the increases, and how they would be rolled out? Is he telling us that he didn’t know they would be retroactive? Is he telling us that he doesn’t know the impact to the City’s budget of these raises and that he doesn’t know how we can pay for them?

OK, he isn’t alone in that last bit. No one in the City has yet told us the answer to how these raises hit the City’s budget.

Is it credible that the Mayor did not know the details of this plan? Is it credible that he left it to his Business Administrator to develop the plan and present it to Council for approval without his knowledge? That’s what the man told a reporter!

Sadly, it is credible. In Mr. Jackson’s own words, he has described himself as “a hands-off guy” when it comes to a lot of  day-to-day municipal administration. I have in this space taken him to task for his repeated tendencies to be hands-off of his own Administration. In May of this year, I wrote a post of which 4 months later I don’t have to change a single word.

I don’t have to change a word, but I can add to this list. Eric Jackson must also been “hands-off” during his first year of office, when in a recent city audit “the city was also cited for over-expenditures tallying nearly $105,000, failing to maintain proper payroll records, and hiring consultants and professions without the required state approval.”

And, we see today, he claims to have been “hands-off” of a proposal to give himself and his senior managers a 15% raise. He didn’t even read the memo until he read about it in the press, if we are to believe him. Actually, you have to wonder if he even “read” about this in the press, or had the story told to him. Because the man doesn’t seem to stay up with current events around him, let alone within his own City Hall.

In the same Trentonian piece today, Mr. Jackson offers a pathetic defense of his record. He picks Chris Christie, of all people! to validate his effectiveness in office.

Jackson proudly told Mr. Ray, “When I took over in 2014, the administration was in a mess and we had a governor who wouldn’t come into Trenton for anything except to go to his office. Now the governor communicates with us on a regular basis. We’re promulgating regulations for the capital city’s benefit, and Gov. Christie has even signed legislation on our steps. He and I don’t agree on all issues, but we have a working dialogue, which is something that didn’t exist before. It took work for that to become a reality, it wasn’t magic.”

The Mayor is awfully proud of his relationship with the Governor. To me, that’s very strange, because the Governor doesn’t share the love back with Trenton. Just last week, Christie canceled the state’s Urban Enterprise Program (UEZ), which benefits Trenton and other cities in the state by allowing a lower sales tax rate to be charged by businesses here. The Governor’s veto of a bill to extend the program will hurt this City. Assemblyman Reed Gusciora, sponsor of the extension bill, told NJTV, ““We have over 100 UEZ businesses in the city of Trenton, and it’s just going to reverberate. There’ll be less employees, less business.” Thanks, Governor Christie.

Maybe the Mayor didn’t read that memo. And maybe he missed the stories earlier this summer which reported the Governor was using the state’s Transitional Aid Program as a political football in his dealing’s with the state’s Legislature. Christie sequestered $100 Million in funding, of which Trenton desperately relies on around $20 Million to balance its budget. Last week the Governor released $54 Million of that amount, but it seems the remainder of that money is still being held hostage.

Canceling the UEZ Program. Freezing Transitional Aid. Doesn’t sound like “a working dialog” to me between East State Street and West. Sounds to me that Trenton represents to this Governor is what it’s always been: a chance for an upwardly-grasping politician with his eyes set on a national job to polish his resume by alternately rewarding and punishing urban municipalities as needed to keep his own political future alive. It has nothing to do with Mr. Jackson, and never did.

But I’m sure Jackson didn’t get that memo either.

With the report today of Eric Jackson’s claim of obliviousness to his plan for significant raises – a claim that rings all the more hollow when read with his argument just a few weeks ago that “Leadership does cost money.” He wasn’t talking about any 1.5% cost-of-living-adjustment with those words, just as  his “chief executive officer” claim wasn’t trying to justify a nominal COLA.

No. Just as CEO Bresch is transparently trying to do damage control after a disastrous series of bad corporate decisions and PR blunders, our own “CEO” Mr. Hands-Off Jackson is attempting damage control to rescue his own poorly-conceived plan to reward himself and his colleagues for a job well done.

This revised plan to grant generic “EpiRaises” under another name is still flawed. Unless and until more details are provided, and any retroactive portion be dropped, I cannot support this plan. It’s also clear that an omnibus approach – lumping all of the categories listed above under one plan – is not fair. Council has already exempted themselves from the bill. The revised bill needs to be defeated, and separate proposals for each class – mayor, department heads, directors, judges, and so on – made.

It remains to be seen whether Mylan, more specifically, Heather Bresch, can survive the disaster they brought down on their own heads.

In Mr. Jackson’s case, I think his claim of being left in the dark about his Administration’s policies, and his record over the last two years, sadly proves that he presides over yet another failed Mayoral Administration in the City of Trenton.