WYTHEVILLE, VA., JULY 14 -- The largest prison construction program in Virginia's history -- two new penal institutions with a total of 1,700 beds -- was unveiled here today by Gov. Gerald L. Baliles.

The $110 million construction plan calls for a 1,200-bed maximum- and medium-security prison to be built in Greensville County off I-95 near the North Carolina line, and a 500-bed medium-security institution in Buchanan County, in Southwest Virginia.

"It's Christmas in July," whooped Willard Owens, one of the Buchanan County residents who worked to get the prison -- with its 350 jobs and $7 million annual payroll -- to combat chronic unemployment in the coal fields. The Greensville prison is expected to have an annual payroll of $16 million and generate about 750 jobs.

Baliles made the announcement here during a day of ribbon-cutting and pork-barreling in the often neglected southwestern corner of the state.

Work on the prisons could begin later this year, with completion in time for Baliles to deliver on his promise to shut down the antiquated State Penitentiary in Richmond by 1990.

No single facility will replace the century-old penitentiary, according to Vivian E. Watts, secretary of transportation and public safety. She said the 800 criminals now housed there will be dispersed throughout the system. No decision has been made on where the electric chair will be placed after the penitentiary is razed, Watts said.

Baliles said the new facilities are necessary to keep pace with a prison population that has more than doubled -- from 5,300 to 11,400 -- since 1974.

With 1,200 beds currently under construction at prisons in Augusta, Buckingham and Nottoway counties, the corrections system will show a net gain of 2,100 beds when the Greensville and Buchanan facilities open and the Richmond penitentiary is shut down, Watts said.

The 1987 General Assembly approved $110 million in bonding authority to build the prisons, which Baliles said enjoy wide public support in the localities selected.

However, a number of residents of Jarratt, a town two miles north of the Greensville prison site, expressed anger today over a lack of warning about the decision. Several said they are worried about living and working so close to a large prison.

There was no concern among Buchanan County officials about scaring off potential industry. The county's official unemployment rate has been above 20 percent for more than five years, and one resident, who made the two-hour trip here for today's announcement, said the actual figure is more than likely at 35 percent.

Baliles said the economic incentive and a labor pool of more than 8,000 laid-off coal miners were major considerations in the decision to build a prison in such a remote area.

Buchanan County nestles up against the West Virginia and Kentucky borders, about 350 miles from Richmond.

Asked why he had selected two rural locations, one of them hundreds of miles from the populous eastern corridor of the state, which generates more than 75 percent of the inmates, Baliles said: "I didn't hear anyone from Northern Virginia asking to have one built there."

Although none of the state's 16 existing adult penal institutions is located in Northern Virginia, Watts, a former Fairfax County legislator, said the Greensville site, 55 miles south of Richmond, is within a one-hour drive of the home areas of 52 percent of the system's inmates.

The state has no plans to provide transportation for relatives of inmates but will encourage the expansion of volunteer efforts by public service organizations, Watts said. A prisoner from suburban Washington assigned to Buchanan would be about nine hours from home.

Decisions on which prisoners will be assigned to the new prisons will be made by Corrections Director Edward W. Murray and his staff, Baliles said.

"We keep prisoners as close to home as possible," Murray said in a telephone interview today.

A spokesman for the American Civil Liberties Union, which has sued the state in the past over corrections issues, reacted favorably to today's announcement.

Chris Spanos, public policy and legislation chairman of the Virginia branch of the ACLU, praised the decision to forgo construction of one large prison for two smaller ones, but worried that even the Greensville facility, which will be the largest prison in the state, will be too big, especially if the state continues to double-bunk prisoners.

"Large prisons tend to have problems," said Spanos. One concern, he said, is whether, because of its rural location, the Greensville facility will be able to attract enough professionals -- psychologists, teachers, physicians -- to staff an adequate rehabilitation program.

After corrections officials announced in January that they were considering Charles City County as the site for a 1,700-bed prison, more than 500 residents protested at the county courthouse. Last Sunday, a county delegation demonstrated on the statehouse lawn in Richmond, saying the county had lost a $40 million retirement community because of the possibility that a prison would be built there.

Staff writer R.H. Melton contributed to this report.