Mulching your garden is the best way to have a drought tolerant garden.
Having your garden mulched correctly can save up to 80% of the soils moisture content.
The mulch in itself should not compact down too tightly as it can become hydrophobic and repel water, this can be seen in a lot of fine grade mulched.

A good mulch over time should break down and add to the soils structure, nutrients and water retention ability.
Periodically, mulch may need to be cleared from the stems of the plants to prevent rotting.