Directs the Secretary of the Army to acquire, demolish, and remove structures in the floodway of the Central Passaic River basin (the basin) where excessive damage has occurred in at least two floods. 
Requires that:  (1) the floodway land in the basin be stabilized as part of the ecological restoration program under the Water Resources Development Act of 1990 (WRDA) and, where appropriate, wetlands be created; (2) after the land is vacated, it be held in perpetuity by the most appropriate Federal or State agency, as determined by the Oversight Committee (created by this Act), and be managed as open space; (3) this section be carried out in conformance with New Jersey's Blue Acres Program; and (4) crediting of land acquisition for the non-Federal cost share remain in effect in accordance with WRDA. 
Directs the Secretary to:  (1) acquire, demolish, and remove additional structures, or floodproof structures, to the ten-year floodplain in the floodway of the basin in areas where excessive damage has occurred in at least two floods; (2) floodproof structures in the floodplain of the basin to the 50-year floodplain in areas of high risk, at a 55 percent Federal, 20 percent State, and 25 percent property owner cost share; (3) provide information on techniques to deal with flood management in the remainder of the floodplain to the 100-year protective flood elevation; (4) acquire wetlands in the floodways throughout the Great Piece Meadows of the basin, to supplement the wetlands acquisition authorized under WRDA, and upland transition areas with significant wildlife or other natural values; (5) transfer the wetlands and transition areas to the United States Fish and Wildlife Service, or an appropriate State agency, which shall manage the wetlands and transition areas in accordance with proper wetlands management principles; (6) acquire strategic land in New Jersey and New York to prevent flooding and to prevent flooding from increasing in the High Mountain area in Wayne, New Jersey, and the urban area of the Molly Ann's Brook project in North Haledon, New Jersey; (7) complete the Passaic River Restoration Project from Little Falls to Newark Bay, New Jersey; and (8) complete the streambank restoration element of the project for flood control, Passaic River Main Stem, New Jersey and New York (the Project), authorized by WRDA, known as the Joseph G. Minish Passaic River Waterfront Park and Historic Area, New Jersey (Minish Park). 
Requires the Administrator of the Environmental Protection Agency to assist the Passaic Valley Sewerage Commissioners in the implementation of remedial actions for the combined sewer overflows in the lower Passaic River Basin from Great Falls to Newark Bay. 
Establishes the Oversight Committee. 
Finds that the most appropriate solution to flooding in the Passaic River basin is the "preferred alternative" (a qualified acquisition and hazard mitigation plan for the Project).  Directs that such alternative be implemented immediately. 
(Sec. 4) Authorizes appropriations to begin the Federal portion of a buyout of floodway structures authorized by WRDA.  Directs that $15 million made available by New Jersey for the Blue Acres portion of the Green Acres Bond Act of 1995, approved by New Jersey voters, constitute the 25 percent non-Federal cost share. 
Authorizes appropriations for:  (1) acquisition of freshwater wetlands, and for floodproofing of structures, in the floodplains within the Passaic River basin; (2) acquisition of land in the Highlands Province to reduce flooding in the Passaic River basin in New Jersey and New York; (3) acquisition of land and the development and redevelopment of parkland along the Passaic River from Little Falls to Newark Bay, Kearny; (4) completion of the Minish Park, at a 100 percent Federal cost share; (5) implementation, each fiscal year, of the preferred alternative and administration of the Oversight Committee; and (6) acquisition of land at High Mountain. 
Directs that, for the combined sewer project in the lower Passaic River basin, a project budget be established of $85 million, with a $65 million Federal share.  Authorizes appropriations for the purpose of making a grant to the Passaic Valley Sewerage Commission for FY 1999 through 2001.
Output: A bill to enact the Passaic River Basin Flood Management Program.