Trash collection in three Camden County municipalities will cost the towns almost 10 percent less, or about $3 million, under a five-year joint contract negotiated through collective bargaining, officials announced Wednesday.

Word of the savings came days before a 2 percent cap on property tax increases is to take effect in New Jersey on Jan. 1. The cap, combined with shrinking tax bases and rising costs, has made it difficult for local governments to balance their budgets, officials say.

The trash-services agreement involves five entities: Cherry Hill and its fire department and school district, Gloucester Township, and Merchantville. Cherry Hill had one contract for residential solid waste and recyclable materials collection pickup and disposal, Gloucester had another.

In announcing the results of their collective bargaining, the mayor of Cherry Hill and elected officials from Gloucester Township and Merchantville said they welcomed cooperative deals with other groups and municipalities.

"Anyone who wants to share, we're there," said Cherry Hill Mayor Bernie Platt. "Elected officials would all be doing a disservice to the taxpayers if they don't do shared services."

Earlier Wednesday, Senate President Stephen Sweeney (D., Gloucester) said he was considering introducing a bill that would withhold state aid to towns that fail to enter shared-services arrangements.

The forced consolidation, or merging, of municipalities "won't easily get done, but shared services works," Sweeney said in an interview on the radio station New Jersey 101.5.

Gloucester Township Mayor David Mayer, a Democrat and former assemblyman, said he welcomed the state's input on cost savings but was wary of a penalty system.

"The concept of penalizing is a tricky one," he said. But Sweeney is "focusing on shared services, and we're focusing on shared services."

The contract between the five participants and Republic Services, a national trash collection and recycling corporation, totals $28.6 million and begins Jan. 1.

The deal will mean layoffs in Merchantville, where an eight-employee public works department collects trash, said Councilman Joe Brickley.

"There will be some cost savings and efficiency layoffs, but we're going to let the operation go on as is for a little while and see," Brickley said.

Contact staff writer James Osborne at 856-779-3876 or jaosborne@phillynews.com.