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Negotiations have been going on for weeks between the State Assembly, State Senate, Mayor Michael Bloomberg and city teachers union – and after coming to an agreement late last night, it passed overwhelmingly in the Assembly today, and then in the Senate.

By raising the cap on the number of charter schools from 200 to 460, the legislation would boost the state's chances of winning $700 million through the federal "Race To The Top" competition. But the grant application is due on Tuesday, so lawmakers still have to work fast.

The governor says he's ready to move on the legislation.

"I will sign it 10 minutes after it passes to get it to D.C.," said Paterson. "If there are delays, we have until Tuesday."

The state comptroller would now have the ability to audit the schools, and charters would be required to serve a student population similar to that at the nearby public schools, meaning the same percentage of students living under the poverty line, requiring special education services and learning English.

Mayor Michael Bloomberg admitted on the radio this morning that although winning Race To The Top funds would be nice, the real motivation was just to raise the cap – since the state has almost maxed out the number of charters allowed under the current law.

“People think it’s about trying to get $700 million from the federal government, that would be great if we do, but it’s really about getting more charter schools,” Bloomberg said. “There is something like 40,000 kids waiting to get into charter schools. We don't have nearly enough.”

The biggest battles over charter schools have been when they've shared building space with traditional public schools. The new legislation would include several new provisions, like requiring any improvements made to the charter side of the building also made to the public school side and requiring the Department of Education to draw up a detailed plan before allowing charters to move in.

There had been a push for the public school parents to be allowed to vote on whether they wanted to share their space with a charter – but Bloomberg administration called that a poison pill and it didn't make it into the final legislation.

Meryl Tisch, the chancellor of the Board of Regents, told NY1 several weeks ago that New York would not even apply for Race To The Top grant if the charter school cap legislation did not pass, but now it looks like the state will once again be sending its application to Washington.