The 18,000 people who live on the north side of State Street today invited the 24,000 who live on the south side to step across the double yellow line that divides their city -- and the states of Virginia and Tennessee -- for a party.

The daylong event was designed by Virginians to show how united a divided city can be. It was also to help celebrate a yearlong event called "Tennessse Homecoming '86," an observance designed to lure Tennesseans back to their native state.

After a pancake breakfast at the high school on the Virginia side (called Virginia High School), Rep. James H. Quillen (R-Tenn.) stepped to the podium outside the Bristol, Va., City Hall, to thank the Virginians.

Quillen, who like many residents of the area was born in one state and lives in the other, spoke of the joy of life in two states. "We have roots in both states," he said. "We're not hostile neighbors; we have common goals."

What sets Bristol apart from other border communities, such as the District and Chevy Chase, is that the dividing line is the main street: It's as if one side of K Street were in Maryland and the other in Virginia.

There are two of almost everything here -- two mayors, two police and fire departments, two telephone area codes, two high schools and two tax rates. Bristol, Va., has one set and Bristol, Tenn., the other.

For most folks here, the distinctions are incidental.

"If you went to Tennessee High School, you live in Tennessee," said Vicki Houser, who does just that.

"It's more or less the side you're born on," agreed Virginian Cecil Leonard.

Over the years, the two sides of the State Street have attracted different kinds of stores.

Kyle Barr, owner of the Graham Bible Book Store on the Tennessee side, said that because of the difference in the sales tax (4 percent in Virginia and 7 3/4 percent in Tennessee), "all the jewelry stores are on the Virginia side and all the 5-and-10s are over here."

On the other hand, the south side attracts doctors, dentists and other high-income professionals, because unlike Virginia, Tennessee has no state income tax.

Kathy Hickie, an elementary teacher who moved here from Atlanta, said "for years there was no decent restaurant on either side," which she attributed to a longtime ban on alcohol sales.

Then voters on the Tennessee side voted wet, and South State Street got Tellers, the city's first upscale restaurant, in a former bank building.

Some merchants on the north side wanted to follow suit, but the city's Virginia voters rejected the idea three times. Nonetheless, beginning July 1, it will be legal to sell liquor-by-the-drink on the north side too.

The manner in which that was accomplished produced criticism from both wets and drys.

Despite the objection of Bristol's representatives to Richmond, the Virginia General Assembly passed a law this spring that permits all cities in the state to sell liquor. Until then, it had been a local option, and Bristol was one of five cities -- Northern Virginia's Manassas Park was another -- that chose not to.

"A lot of people are just as glad Gov. Gerald L. Baliles didn't come," said Nancy Marney, chairman of today's event. Baliles, who was at a steeplechase in Northern Virginia, signed the legislation despite being urged to veto it by many residents here.

Like the coming of booze, some differences are disappearing.

Recent joint efforts include an advisory planning commission, a library, built on the Virginia side, and a waste water treatment plant, on the Tennessee side. And the single Chamber of Commerce has launched a $1.3 million advertising campaign for industrial development.

"Whoever brings in a prospect shows them his state," said Bristol, Tenn., Mayor Ewell Easley. "If they walk in the door of the chamber, they get to see both sides."

Bristol, Va., Mayor James Rector said he hopes a new 67-acre industrial park on his side will help lure more jobs to Virginia.

Some interstate problems remain: The streets that cross State Street have different names -- the ones in Tennessee are numbered, the ones in Virginia named. Law enforcement isn't easy, either. As Tennessee police officer Rick Campbell noted: "If a guy runs a red light from my side, he's home free once he crosses the yellow line."