COLUMBUS, Ohio – The state will close an 88-year-old prison in northwest Ohio by July to save $25 million a year and help balance Ohio’s budget, the prisons director said Tuesday.

Dorms at three other prisons will reopen to help handle the 1,565 inmates from Lima Correctional Institution, which the state says it can no longer afford to operate because of its size and age. It’s the second time in about a year that Ohio has closed a prison because of budget concerns.

“The budget situation is as bad as I’ve ever seen it, and I’ve been working in this department for 30 years,” said Reginald Wilkinson, director of the Ohio Department of Rehabilitation and Correction.

The department also will offer 800 to 900 workers the option of early retirement and will freeze hiring for nonessential jobs until June 30, the end of the fiscal year, Wilkinson said. The freeze would not apply to corrections officers and health care workers. “We’re not going to think that just closing one prison will save all the money we’ve been asked to save,” he said.

Gov. Bob Taft said in his State of the State speech last week that at least one prison and one juvenile detention center must be closed to help cut costs. The state must close a $720 million deficit by June 30 and could face a $4 billion budget hole in the two years after that.

The governor also proposed raising the taxes on cigarettes and alcohol.

Wilkinson said the state would have had to close two other prisons to equal one as big as Lima, which has 490 employees and an annual operating budget of $36.3 million. The shutdown will leave the state with 32 prisons.

Public employees unions, especially the Ohio Civil Service Employees Association, argued that the state should first close its two privately run prisons. Workers at the private prisons in Grafton and Conneaut in northeast Ohio are not represented by the union. Peter Wray, a spokesman for OCSEA, said Ohio would have saved money in unemployment costs by closing the two private prisons, which are run by a company rather than the state.

“It would have made economic sense,” Wray said. “It’s a lack of political will.”

The medium-security Lima prison was built in 1915 and was a state hospital for the criminally insane before being turned into a prison in 1982.

Although its operating budget is $36.3 million, the closing will save only $25 million, Wilkinson said.

“We still have to feed and clothe and house the prisoners,” he said.

He said the department must cut $31 million from its budget by July. The current budget had been cut by about $124 million, Wilkinson said.

Laid off workers at Lima Correctional will be considered first for any job openings at other prisons, Wilkinson said.

Inmates will be sent to 10 other prisons. The department will reopen dorms at Allen Correctional Institution at Lima,

Southeastern Correctional Institution near Lancaster and the North Central Correctional Institution at Marion, said Andrea Dean, a prisons spokeswoman. Those dorms were closed in December 2001, along with the Orient Correctional Institution near Columbus.

Lima Correctional is among the top 15 employers in Allen County, which was hit hard by layoffs at a tank plant and oil refinery in the late 1980s and early 1990s.

Marcel Wagner, president of the Allen Economic Development Group, said losing the prison will add to the tough economic climate.

“We’re talking about an impact of millions and millions of dollars to the economy,” he said.

“It’s not just a matter of finding them a job,” Wagner said of the prison workers. “It’s finding them a job that will allow them to keep their standard of living.”