The government in question here is the one representing the tax-paying residents of the town of Fort Garland. They voted to stop selling their scarce water supply to the non-tax-paying residents of unincoporated Costilla County. So it seems to me that the "government" served the interest of their constituents fairly.
The water board didn't have to put it up to an immediate, unplanned vote that day, but they were inexperienced in dealing with "hollering" and waffled under a little pressure.
Add to it that they executed the short-term interests of their constituents with such ... alacrity that it put people in physical risk.
So who came out ahead here? I don't disagree that all those folks living off-grid really aren't living off-grid, and reality checks are healthy, but even a 2 week warning would have served everybody's interests, served the same FAFO lesson and maybe kept the animosity down a little.