The approach would keep taxpayers from repeatedly paying to repair flooded properties while providing a buffer to help protect nearby properties from future flooding.
The League of Municipalities is reviewing the proposal and expects to take a position soon, said its executive director, Bill Dressel.
Experts concurred after Hurricane Irene that relocating people from homes that flood repeatedly is the best long-term remedy.
Larry Ragonese, a spokesman for the state Department of Environmental Protection, said the state can't reverse decades of urban development that are widely blamed for speeding runoff and making floods worse. But it can help people get out of the most frequently flooded areas.
Since 2009, the state and the Federal Emergency Management Agency have bought 158 frequently flooded properties and handed the land over to the local governments to restore as flood plains.
An additional 179 properties are in the pipeline for purchase in the voluntary program. That's still just a fraction of the 1,100 or so homes considered to have severe, repetitive losses.
The federal government pays up to 90 percent of the buyout costs.
The state currently has about $26 million dedicated to Blue Acres purchases.
The Senate Budget Committee approved the measure 10-0. The Assembly, which has no sessions scheduled before the Nov. 8 election, has not considered the bill but could do so before the session ends in January.
In a related effort to address flooding, the budget panel approved a measure calling for $100 million in emergency borrowing. The borrowing, which would not be subject to voter approval if it was deemed an emergency, would go toward repairs of water and transportation infrastructure damaged by flooding.
The vote was 7-2, with two members abstaining; no Republicans supported it.
Republican Sens. Kevin O'Toole of Wayne, who abstained from voting on the measure, and Joe Pennacchio of Pine Brook, who voted against it, expressed concern over supporting a borrowing bill that wouldn't need voter approval.
