AZ HB2776

Establishes the rural watershed sustainability initiative fund administered by the Department of Water Resources, consisting of legislative appropriations and eligible federal/private grants.

Appropriates $500,000 from the state general fund for fiscal year 2025-2026 to the fund, with appropriations exempt from lapsing provisions.

Authorizes department to provide grants to local watershed groups in rural areas for administrative and operational needs including staff salaries, training, technology, software, and grant writing services.

Allows department to use up to 15% of fund monies annually for administration and staffing, and requires annual reports to the governor and legislature beginning December 1, 2026.

Directs department to adopt rules establishing application criteria, grant amounts, disbursement procedures, and reporting requirements, with preference given to applicants in high-risk or critically depleted groundwater basins with clearly defined conservation goals.