Pressure is mounting on California to join an antitrust lawsuit to block Oracle Corp.'s $6.3 billion hostile takeover bid of Pleasanton's PeopleSoft Inc.

Contra Costa, Alameda, Napa and Santa Clara are among the counties that have sent a joint letter to Attorney General Bill Lockyer, expressing their concern that they could be forced to spend millions of taxpayers dollars -- dollars that they don't have in light of the state's budget woes -- to convert from PeopleSoft to Oracle technology and encouraging the attorney general to consider a lawsuit to halt the proposed acquisition.

California State University Chancellor Charles Reed has also made a call to the attorney general's office to discuss the university system's $445 million project to install PeopleSoft's software and how it could be affected by the deal.

And other coalitions representing government agencies, such as the Municipal Information Systems Association of California and the Metropolitan Information Exchange, are contemplating similar letters to government officials.

"With the decreasing budget and the challenges we're faced with, the time could not be worse for local governments to see this type of acquisition," said Steve Reneker, chief information officer in Riverside County and president of the California County Information Services Directors Association, which sent the letter.

The office of California's attorney general is weighing a move to join the state of Connecticut's antitrust suit against Oracle. Connecticut, in an effort to protect its recent $100 million investment in PeopleSoft's applications, filed the suit last week charging that the deal would violate state and federal antitrust laws. It is trying to build a coalition of states and consumers and held a conference call this week with such states as California, Texas and Colorado to discuss the suit. Separately, the Department of Justice is also reviewing the proposed acquisition and is expected to determine Monday whether it will launch a comprehensive investigation.

The California County Information Services Director's Association, which represents 43 of the state's 58 counties, asked in its letter that Lockyer consider a suit similar to Connecticut's. "This kind of acquisition neither benefits the market nor enhances the products and solutions available to government here in the great state of California," the letter said.

Tom Dresslar, a spokesman for Lockyer, said that the attorney general's office has not yet received the letter. "We're monitoring developments in the case," he said. "We have no plans to intervene at this point."

If California, which has a reputation as one of the country's leading antitrust states, joins the coalition, it could give a huge boost to the credibility of Connecticut's suit and PeopleSoft's antitrust claims. "It may have the effect of convincing other state attorneys general to join in the litigation," said Richard Vernon Smith, a partner at Orrick, Herrington & Sutcliffe LLP in San Francisco.

California, home to both PeopleSoft and Redwood City-based Oracle, could also file its own lawsuit. Even if federal antitrust regulators decide not to block Oracle's takeover bid, the state could stop the acquisition under its own antitrust laws.

"Those statutes could be interpreted more broadly than federal antitrust statutes," said Kevin Grady, a partner who specializes in antitrust cases at law firm Alston & Bird.

Oracle dismissed the association's letter as the result of PeopleSoft's scare tactics.

"In an effort to save their own positions, PeopleSoft management has cynically alarmed their own customers into believing that Oracle will not support them and will drop the important features that they need," said Jennifer Glass, a spokeswoman for Oracle, in a statement. "This is absolutely untrue."

Oracle, which initially said it planned to phase out most of PeopleSoft's products and employees, softened its stance this week to soothe PeopleSoft customers. Jeff Henley, Oracle's chief financial officer, also sent a letter to employees with a list of key talking points, such as Oracle's commitment to support PeopleSoft's products. "We are running ads and sending letters, but we have to reach out and speak to these customers as well," he said in the letter.

But Dave MacDonald, director of information technology for Alameda County, believes that though Oracle said it will support PeopleSoft's products for a number of years, customers will eventually have to transition to Oracle's technology.

"When that happens, that's a major conversion," he said. "It's like starting the implementation all over again."

Though Oracle said it will provide the software itself for free, the counties say they can't afford to spend millions of dollars to rehire consultants and retrain employees. Alameda County began using PeopleSoft's human resources and payroll system in January to oversee its 10,000 county employees, after spending $8 million on the software alone, six years to research the project, and four years to install it. Contra Costa County implemented its PeopleSoft human resources and payroll system in 1998, which it uses to monitor its 10,380 county employees. Contra Costa County's health services department also uses PeopleSoft's software to handle its budgeting.

"If we have to migrate from PeopleSoft to Oracle, it's going to cost our county millions of dollars," said Ben Wilson, chief information officer for Napa County, who sent his own letter to the attorney general. "(PeopleSoft's) product is the backbone of what we do."