Gov. Code, § 67770

(a) (1) As a condition of receiving funds pursuant to Chapter 3 (commencing with Section 67750), each transit operator that the commission allocates funds to pursuant to paragraphs (2) to (9), inclusive, of subdivision (b) of Section 67750 shall verify to the commission that it will maintain its expected level of funding for operations and shall not supplant any sources of operating revenue under its control or fund sources allocated by the commission that were used for transit operations in the preceding three fiscal years.

(2) The expected level of funding for purposes of paragraph (1), which shall be referred to as the maintenance of effort, shall be calculated using the transit operator’s average discretionary operating expenditures for the preceding three fiscal years, two years in arrears as reported to the Controller in its annual report submitted pursuant to Section 99243 of the Public Utilities Code.

(b) (1) Notwithstanding subdivision (a), a transit operator subject to this chapter may reduce the amount of funding contributed towards its operating budget in proportion to any reduction in operating costs or reduction in operating revenue based on factors outside the control of the operator, including, but not limited to, the expiration of a voter-approved revenue source or the determination based on a statistically valid poll that an expiring ballot measure lacks sufficient support to warrant placement on the ballot.

(2) Before formally taking an action to reduce its operating funding pursuant to paragraph (1), a transit operator shall notify the commission in writing that it is reducing the amount of funding contributed towards its operating budget.

(c) A transit operator subject to this chapter may request that the commission grant an exception to the requirements of this chapter if the transit operator demonstrates any of the following conditions:

(1) The operator has a need to transfer operating funds to state of good repair needs for assets owned and operated by the operator.

(2) The operator has a need to cover the cost of compliance with a state or federal law or regulation.

(3) (A) The operator seeks to finance a public transit capital expense and does not require the full balance of its allocation of revenues provided pursuant to this title to maintain or exceed the service hours it provided in the 2018–19 fiscal year or the service hours it is currently providing, whichever is greater, and the redirection of its operational funding for the public transit capital expense will not require the operator to reduce its service hours.

(B) The Legislature finds and declares that it is beneficial for transit operators to increase the service hours of transit service they are providing beyond the service hours described in subparagraph (A).

(d) The commission shall provide written findings explaining why a request submitted pursuant to subdivision (c) is denied.