Virtually all legal systems are permissive in the sense that anything not prohibited is permissible. That's why basically all laws prohibit activity, and permitting activity is generally done by repealing/modifying the law prohibiting that activity.
The underlying issue here is that the state passed a law prohibiting local governments from granting rights to water to their citizens. The state prohibition supersedes the local government, so this local law is only allowed if they can find something that supersedes the state law (eg some part of the state constitution). No such clause exists in the state constitution, nor in any other state law.
If state law or the state constitution was modified to grant that right, the local law would be allowed to stand.
This is less about rights and more about state law superseding local law.