Members of a state legislative subcommittee took Maryland prison officials to task today for failing to spend $1 million appropriated two years ago to improve the state penitentiary's troubled south wing where a guard was stabbed to death 12 days ago.

"Why is it that on Oct. 17, 1984, $1 million appropriated in 1982 still is not spent?" snapped Del. Paul Muldowney (D-Washington County), vice chairman of the House Appropriations subcommittee on law enforcement and transportation.

"I'd be on the governor's desk" demanding action, Muldowney said.

In a series of terse exchanges, Muldowney and other legislators accused prison officials of dragging their feet. The state officials countered that the legislators do not appreciate what one called "orderly state business" -- the long and complex process of planning renovations, awarding contracts and completing work in the unique world of prison construction.

" 'Orderly state business' has gotten us where we are today," scoffed subcommittee Chairman Timothy F. Maloney (D-Prince George's).

The head of the state's Department of Public Safety and Correctional Services, Frank Hall, also used today's long-scheduled subcommittee meeting to reiterate his call to the legislators for replacing the 173-year-old penitentiary in central Baltimore and creation of a new 1,500-inmate prison to accommodate the state's growing prison population. He proposed no specific locations.

The total Maryland prison population, now about 12,500, has pushed the state's various facilities to 150 percent of capacity, Hall said, and is not expected to level off or decline until after 1990.

Already under fire from two guards' unions and recovering from a three-day sickout by dozens of correctional officers after the Oct. 6 stabbing of guard Herman Toulson Jr. at the penitentiary, prison officials acknowledged that the $1 million for the south wing there still has not been spent.

But there is a good reason, said Hall: lack of space to move the nearly 400 inmates in the south wing during any extensive renovations.

Noting that many are "dangerous and assaultive" inmates held in "administrative segregation" as punishment for violating various internal prison rules, Hall said it is essential that they be moved but difficult to find temporary housing elsewhere in the overcrowded prison system.

Hall said additional sections of the new Roxbury prison facility in Hagerstown are expected to open soon, and the south wing inmates will be transferred there. The move could come within 60 days, other officials said.

Even so, said Paul Showell, director of capital planning for the prison system, "We are 120 days from any substantial work to begin on the south wing." He said in an interview later that 120 days is "very optimistic" and completion of the renovation work is another six to seven months after that.

The work, he said, includes improving the heating, ventilating, electrical and plumbing systems in the fortress-like, five-tiered wing.

As an emergency stopgap measure, officials announced to the subcommittee, normal bureaucratic procedures have been sidestepped to expedite conversion of eight cells in the wing to shower stalls at a cost of $50,000 to $75,000. The job should take 45 days, Showell said.

The new showers and elaborate "security cages" around them are important in security terms, officials said, because the showers will be placed on each of the five tiers, eliminating the current dangerous practice of escorting inmates up and down several flights of stairs to a central shower area. In addition, officials said they are implementing several new security measures. They include increasing the staff assigned to the south wing by 13 officers and issuing them flak jackets, 25 additional walkie-talkies and three hand-held metal detectors.

A brief sickout by guards angered at what they said were dangerous working conditions in the south wing ended last weekend when state officials worked out a three-point agreement with the American Federation of State, County and Municipal Employees, one of two unions representing penitentiary guards.