The billboard peeks out from a grassy knoll along Interstate 64 east of Richmond: "Alabama is open for business. For more information, contact the Alabama Division of Tourism."

Virginia isn't the only place for lovers anymore, the sign suggests. Other states have joined the battle for tourism dollars and are roughing up Virginia's proud tourism heritage.

Alabama, for example, raised its tourism budget by 69 percent during the 1987 fiscal year; this year it will spend $5.1 million to bring visitors to the land of cotton.

Other states also have raised their promotion budgets. Spending for tourism averaged $4.9 million per state last year, and state budgets have been soaring by an average of 14.9 percent annually.

During this fiscal year, Virginia will spend $6.54 million on its tourism budget. New York and Illinois will spend more than $20 million each. Six other states will spend more than $10 million. And these totals count only state funds; tourist attractions and municipalities also spend money to attract visitors.

For 10 years, beginning in 1969, Virginia ranked No. 1 in the amount of tourism dollars spent by states. But since then, the state's ranking has fallen -- to 13th last year and 17th this year, according to the U.S. Travel Data Center in Washington.

"We used to be on the cutting edge with our travel marketing program," said Patrick McMahon, director of the Virginia Division of Tourism in Richmond. "We were the first to invest heavily in media budgets, in advertising. We outspent all other states. Now what we do is just the tip of the iceberg."

Beneath the iceberg's surface wait states like Alabama. "We are stepping up our advertising campaign," said Marilyn Carter, a tourist representative with the Alabama Division of Tourism in Montgomery. "Alabama wants to become known as the 'state of surprises.' "

Many states this decade have surprised Virginia with their marketing voracity. "Every other state seemed to get the idea to market themselves at the same time," said Margaret Lesniak, Virginia's deputy tourism director. "I came here in 1973. All of a sudden in 1979, the environment changed."

McMahon, the state's tourism director since 1985, shrugs. At tourism-group gatherings such as the recent Governor's Conference on Hospitality and Travel in Richmond, he can make his case for more funds. But being an appointee in the state's executive branch, he cannot lobby the legislature contrary to the governor's intentions. It's not that Virginia now spends less money on tourism, he said, but other states have caught up.

He recited a litany of competitors' achievements. Florida and New York published 28-page advertisements in magazines. Michigan, strapped by a troubled auto industry, has quadrupled its tourism budget. Texas and Louisiana have turned from oil to tourism; Texas increased its tourism budget by 152 percent this year.

"We can't expect the same impact from our ads anymore," McMahon said. "Ten years ago, just a handful of states advertised in the New York market. Now we see 10 states and several foreign countries going for the New Yorkers' dollar."

Countries such as the Bahamas and Ireland spend more on tourism advertising than any state, Secretary of Economic Development Richard Bagley said at the governor's conference.

"Other states, other countries have picked up steam," Bagley said.

If Virginia loses tourists to other states, it also will lose a healthy income base. The division estimated that in 1986 travelers spent $6.1 billion in Virginia, about $310 million of which went to state and local tax coffers.

The division, working with travel experts from William & Mary and Virginia Tech, said that for each advertising dollar spent, another $2.50 is returned to the state's retailers.

About 137,000 jobs and 41,000 Virginia businesses are directly related to tourism, the state's second-largest industry, McMahon said. But that pillar of the economy might begin to decay unless Virginia can come up with more money to promote itself. A battle over the tourism budget is expected in the General Assembly.

McMahon says the state could only maintain its current programs under the present budget. "We had hoped for more money to allow us some room for growth," he said.

Gov. Gerald L. Baliles has proposed increasing the division's tourism budget by $1.5 million during each of the next two years. That increase, which amounts to about 22 percent, would slide Virginia into 14th place among states in the current tourism-budget rankings. The division is hoping for more.

"It's very expensive to advertise," said Frits Hudjens, chairman of the Virginia Hospitality and Travel Association in Richmond and a General Assembly lobbyist. "We've got to do what is necessary to bring in more money."

Nineteen years ago, the budget held fascination, not concern. Virginia spent a then-massive $800,000 on tourism in an era when states didn't believe much in self-promotion.

In the 1970s, the state's "Virginia is for lovers" advertising slogan became a well-recited notion on the lips of tourists from the Northeast and Midwest. It was nationally known, printed on the fronts of sweatshirts and the pages of newspapers and magazines.

"We trade on the equity in that slogan," said John Boatright, group vice president of The Martin Agency, a Richmond-based advertising agency that devises the state's tourism campaigns. "It's been changed in the past, for four years, but people remembered 'Virginia is for lovers' more than any other message about the state. There's no use fighting it."

In 1986, Virginia again officially became the state for lovers. The slogan was promoted from being a mere tag line in small type at the bottom of an ad to a bold-faced message.

But carrying tourists back to old Virginia now is more difficult than during the slogan's salad days, Boatright said. The trick now is to first gain the customer's attention.

"When we're being outspent four or five to one, it's tougher to get people to look at our ads," he said. "We have to sell specifics, details about the state that make us unique. We have to sell more than a catchy slogan."

About $2.96 million will be spent to advertise Virginia during the current fiscal year, which ends June 30. At least 70 percent of that goes to the northeastern states, Virginia's biggest customers. The ads must appeal to more than one market segment; most vacations are no longer taken by a stereotypical mom, a dad, two kids and a collie in the family station wagon, McMahon said.

Senior citizens, women and young couples without children make up the shifting demographic mix of tourists. But within each category lie subgroups, circles that overlap each other and mean, in some cases, separate ads.

The market is broken into more parts than a tour of Colonial Williamsburg. According to Suzanne Cook, director of the U.S. Travel Data Center, the targeted tourism market partly consists of "suppies" (senior urban professionals); "rappies" (retired affluent professionals); "culture vultures (those who crave museums and boutiques); "homebodies" (who prefer to vacation close to home), and the still-pervasive yuppie traveler.

The division segments its ads. For such magazines as 50 Plus and Sunset, the division emphasizes Virginia's history. "Cover four centuries in 30 minutes," one ad reads.

For the youth market, the division places ads in such publications as People and Changing Times. One ad, which emphasizes the state's misty Blue Ridge Mountains and moonlit oceans, combines a popular song title with the famous "Lovers" slogan: "Have you been looking for love in all the wrong places?"

Nationally, the division in this fiscal year will spend $1.46 million to buy broadcast advertising and about $960,000 on print ads.