38 Studios's $1.125 million check to the state of Rhode Island has cleared, governor Lincoln Chafee announced during a press conference this afternoon, thus fulfilling the first required payment on the studio's loan from the Rhode Island Economic Development Corporation.

Rhode Island is changing its legislation on tax breaks, closing loopholes pertaining to state funds being used for motion-picture endeavors, Chafee said. The state's interest lies in protecting the taxpayers, since "taxpayers have had a very generous deal for 38 studios," Chafee said.

"It's time for them to go out and get private capital funding," Chafee said. "That's the deal. It's a generous deal, but stick to it."

Rhode Island officials believe that the total of the $49 million loaned to 38 has been spent. Chafee said that until late April, meetings with 38 suggested that they would make their May payment.

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