Shortly after his election as president of the city council this morning, Stephen J. Murphy told a packed chamber that difficult financial decisions lie ahead.

"The overarching issue is a singular one: the national revenue crisis continues," Murphy said, adding that the city should expect even less federal and state money as it struggles to finance expanding needs. 

The big budget issues, as Murphy sees it, are healthcare, pension and benefits. "Those accounts are growing at five times the rate of the city's revenue," he said. But he offered no immediate solutions on how to close that gap. 

"There are no easy answers," he said. The city's current formula to balance the budget is problematic, Murphy said. "It's weighted toward the past. We have to take a serious look at the formula we use to bring services to the people of Boston." 

However, President Murphy declined to say that he would ask for concessions from unions, and he stressed that the city is obligated to pay for promised healthcare, pensions and benefits. "We cannot abrogate that responsibility," he told reporters after his inauguration. 

"No one can question the merit of providing for those in genuine need," Murphy said during his inauguration speech. 

Since the city doesn't yet know how much federal and state aid it will receive, no concrete solutions to the financial crisis were discussed, but Murphy said he would like to see business and economic growth in the city. 

Councilor Michael P. Ross, who stepped down as the council president today after two one-year terms, agreed that more needs to be done to spur economic growth in Boston. "My opinion is that we need to work harder as a city to attract business."

Murphy also touched upon the struggles of the city's school system, which he said needs to prepare students for the types of jobs that will open in the future, especially in technological fields.

"I'm not so sure we're doing that," he said, adding that one possibility to prepare students for the future could be to expand the role of Madison Park High School, a charter school in Roxbury.

Murphy, 53, has served 0n the council for 15 years. A Boston native, he was raised in Dorchester's Morton Gallivan public housing, at 16 Woodruff Way, and graduated from Boston Latin School in 1975. He graduated from Stonehill College with a degree in business administration in 1979. He's the son of Stephen J. Murphy, a former Boston police officer and lawyer, and Marjorie Murphy, a retired teacher's aid with Boston Public Schools.

The city council president would become mayor if, for any reason, Mayor Thomas Menino is unable to serve the remainder of his term.

"I'm so happy for Steve," Ross said. "This is someone who knows a lot about our city and is very capable."