OLYMPIA - This Monday, 98 state representatives and 49 senators will descend like pied pipers upon Washington's capital city. Rolling in behind them: throngs of aides, lobbyists, policy wonks and reporters.

But the wake of this activity probably won't extend far beyond the Capitol's 29-acre campus. "Life pretty much goes on as usual around here," says Matt Skinner, from Tee's Me, the downtown novelty shop he owns.

True, government is still Olympia's No. 1 industry and prime tourist attraction. Eateries near the Capitol will feel a jolt of activity when the 1998 legislative session convenes and parking gets more difficult.

But the city has so many other things going on right now that its residents don't seem to view Olympia's legislative identity as all that.

"Whenever anyone comes to visit, I never even take them to the Capitol," says Skinner. "There's quite a scene down here in Olympia."

There's the excellent park system, the quaint downtown and the boardwalk along Budd Inlet, all of which place Olympia on par with South Sound communities like Gig Harbor and Steilacoom for charm and peaceful stroll-ability.

Locals have noticed the emergence of the boardwalk park, Percival Landing, as a bustling community hub.

"We were walking there . . . at 7 at night and it was all lit up and there were all these people out," says Donna Mendenhall, who farms just outside the city. "When we moved here 15 years ago, downtown was so dead, just so dead."

In the past few decades, formerly-staid Olympia has attracted a thriving community of artists and creative types, a phenomenon having more to do with the 1967 establishment of another Olympia campus - The Evergreen State College - than with that of the Capitol.

Around the country, people are hearing about Olympia's music scene, which is a far (and very loud) cry from peaceful or quaint. National focus

Phrases like "indie-rock capital of the nation" have been thrown around in the national media a lot lately to describe the almost unbelievable quantity of talent that has come out of this city of less than 40,000.

Scads of critically-acclaimed punk bands hail from "Oly," including Bikini Kill and Sleater-Kinney (named after an Olympia-area road). Kill Rock Stars, the independent label producing these two bands, is based in Olympia, as are K Records and several other labels.

Even if you're not up on punk or indie-rock, you'll recognize throughout the city the attitude that characterizes Olympia's music scene. A sort of "small-but" defiance has emerged: Small but proud. Small but diverse. Small but not-just-trying-to-be-Seattle. Its atmosphere, many say, actually renders Olympia (gasp) cooler than its big city neighbor and last Big Thing in Music.

Henry Rollins, Fugazi's Ian McKaye and other musicians evidently thought Olympia was happening enough to tool around in for a while: Pictures of them browsing the bins at Positively 4th Street Records - a downtown record shop with a great selection of rare vinyl - hang from the walls.

For punk recordings, head to Phantom City Records, opened last month by Kill Rock Stars founder Slim Moon. "IF YOU SIMPLY MUST SHOPLIFT, GO DO IT AT THE MALL. THANKS FOR YOUR SUPPORT," reads a sign outside the store.

It's not just music, but art in general that flourishes in Olympia, especially anything that could be described as "independent," "experimental" or "fringe."

The Olympia Film Society anchors the film scene, bringing classics and art-house flicks to the historical Capitol Theater.

The theater also hosts live shows, by both local musicians and national acts. Readings, music performances and visual art showings happen at Arrowspace, an "urban grange hall" where artists can rent the space and do what they please, says one of its co-directors, who goes by the name "Godzilla."

Olympia artists sell their diverse creations at several downtown cooperatives and galleries, including Cornerstone Pottery, State of the Arts and Childhoods End Gallery.

Abundant, too, are funky boutiques that seem to peddle irreverence as much as anything else. Tee's Me carries Elvis paper dolls, dashboard hula girls and a T-shirt with the words "Lacey Sucks" emblazoned in an oval in the middle. The latter - referring to the city of about 26,000 bordering Olympia - has prompted complaints from angry city officials there.

. "I was just poking fun," Skinner says. "People poke fun for the way (Lacey) looks and its fast food and strip malls. It's got a Podunk reputation."

But remember: Olympia's a small city, too, one whose residents sometimes view its big-city hipness with utter bemusement.

"We've got the best-dressed punks around," says Lynne Otis, owner of The Old Bank, one of Olympia's antique shops. "They wear these outfits that all match. They're all padded and patched and dark and forbidding.

"I tell them, `What would your mother say if she saw you dressed like that?' "

Prim and proper neighborhoods

The younger, more bohemian side of Olympia is most visible downtown and at Evergreen, northwest of downtown. But much of Olympia looks like the "All-America City" that a sign on Interstate 5 proclaims it to be.

"I live in a neighborhood that Barbara Billingsley could be in. It's right out of the '50s," Otis says. "You drive past the Capitol down one of those side streets and you'll hit Middle America."

These two sides of Olympia's population coexist peacefully, though they don't interact much, many say. "It's like they're living in a different town," says Kill Rock Star's Moon, of Olympia's older guard.

Still, the antique shops sit side by side with the music stores and hip cafes. The magnificent Capitol dome, once considered Olympia's life force, looms to the south. Where Otis and Moon keep shop, it's pretty much seen but not felt these days.

"Those state workers have no presence downtown," Moon says. And still, the city thrives.

--------- If you go ---------

Olympia's downtown is best reached by taking Exit 105A from Interstate 5 and heading north on Capitol Way for about three-quarters of a mile. Downtown is concentrated on the cross streets between Legion Way and Fourth Avenue. For more information about visiting Olympia, call the State Capitol Visitor Center (360-586-3460), the Olympia/Thurston County Chamber of Commerce (360-357-3362) or visit the Olympia Online Web site at: http://www.olympiaonline.com/. Here are some places locals say not to miss::

-- Arrowspace: 117 Washington St.; 360-352-2876.

-- Capitol Theater: 206 E. Fifth Ave.; 360-754-5378 (theater); 360-754-6670 (Olympia Film Society).

-- Childhood's End Gallery: 222 W. Fourth Ave.; 360-943-3724.

-- Cornerstone Pottery: 202 E. Fourth Ave.; 360-352-9534.

-- Dancing Goats Espresso: Olympians from all walks of life come here to read, study and socialize. 124 E. Fourth Ave. (360-754-8187).

-- Fish Bowl Brewpub & Cafe: Hear live folk and jazz shows at the no-smoking pub Saturday nights. Bring your own container for to-go orders of the 10 different brews the company makes. 515 Jefferson St. S.E. (360-943-6480).

-- The 4th Ave.: Locals recommend the cribbage board at this unpretentious tavern, where you can also play darts, pool, backgammon and pinball. Live music on Thursday through Saturday nights. 210 E. Fourth Ave. (360-786-1444).

-- The Old Bank: 404 Washington St.; open 10:30 a.m. to 5:30 p.m. Monday to Friday, 11 a.m. to 5 p.m. Saturday and 11:30 a.m. to 4 p.m. Sunday; 360-786-9234

-- Phantom City Records: 117 Washington St.; 360-357-6852.

-- Positively 4th Street Records: 208 W. Fourth Ave.; 360-786-8273.

-- Radiance Herbs and Massage: This 23-year-old business and holistic health nut's dream has an entire wall-full of herbs - more than 300 varieties in bulk - as well as several hard-to-find European skin-care lines, four massage rooms and a deep Jacuzzi tub. Reservations suggested for massage. 113 E. Fifth Ave. (360-357-5250).

-- The Spar: This restaurant, bar, tobacco shop and newsstand has been an Oly institution since 1935. Beloved not only for its hearty blue-collar kinda food and atmosphere but for the water, which comes from its own artesian spring. 114 E. Fourth Ave. (360-357-6444).

-- State of the Arts: 500 Washington St.; 360-705-0317.

-- Tee's Me: 119 Fifth Ave.; 360-534-9825.

-- Thekla: Gay-friendly dance club and live show venue. Arrive before 10 p.m. if you don't want to stand in line, and expect to pay a cover (it's open until 2 a.m). 116 E. Fifth Ave. (360-352-1855).

-- Urban Onion: Another great place for vegetarians. Try the gado gado, a spicy Indonesian peanut dish. 116 Legion Way (360-943-9242).

-- Wind Up Here: A giant toy store as popular with adults as it is with kids. 121 Fifth Ave. S.E. (360-943-9045).