CONCORD — The pivotal step to deliver the first cost-of-living adjustment for nearly 30,000 retired public employees in a decade narrowly cleared the State Senate Thursday.

The 12-11 vote sends the bill (HB 616) for a 1.5 percent increase to the desk of Gov. Chris Sununu, who has said he will sign it.

The increase, effective July 1, would only to go to state, county and local retirees who finished their government service at least five years ago.

The COLA would be capped at a $50,000 pension, meaning no retiree would get more than $750 per year from it.

Senate Majority Leader Dan Feltes, D-Concord, said the state’s unfunded pension liability remains high but the system has stabilized and can well afford this modest increase.

“In my district, 2,400 retirees including people who have worked their entire life, dedicated public servants struggling with food, medicine, heat and rent and we can’t finally go forward with an actual COLA,” Feltes said.

“It’s been too long.”

Sen. Jeb Bradley, R-Wolfeboro, pointed out lawmakers approved one-time $500 stipends for retirees in 2011, 2013 and 2018, but a permanent COLA would increase local property taxes by nearly $150 million over the next 20 years.

The COLA would raise state taxpayer costs by more than $40 million over the same period.

“You can’t on the one hand promise property tax relief and then on the other vote for a plan to raise them by $150 million,” Bradley said.

Senate Republicans had again proposed Thursday a one-time, $500 stipend but that failed on the same, 12-11 vote.

The Senate GOP plan would have paid the stipend with $7 million in state dollars and only grant it to those making up to a $40,000-a-year pension.

Sen. Jeanne Dietsch, D-Peterborough, broke ranks with the other Senate Democrats and she opposed the COLA and backed the one-time stipend.

She said the state retirement system could not estimate the impact of this increase on local property taxes in her district towns.

“I can’t go back to my towns ... I can’t go back to the taxpayers that I promised I would lower your property taxes and vote to raise your property taxpayers,” Dietsch said.

The New Hampshire Retirement Security Coalition said in a statement studies have shown 80 percent of the economic benefit from this COLA would remain in NH.

Sen. Harold French, R-Franklin, said most of the retirees in his district have lower pensions and would get more from a one-time, $500 stipend than a 1.5 percent increase.

But Sen. Kevin Cavanaugh, D-Manchester, said it’s time retirees get an increase they can depend on year after year.

“They want the COLA because they can depend on it,” Cavanaugh added.