Jeffrey Houpt, dean of the UNC School of Medicine, said planning for the center will continue as normal and then be evaluated when the legislature's next session begins in January.
"We will continue design for the center and then go back in January and see where the interest level is," Houpt said. "We'll definitely take the center back to them if there is interest."
Houpt said most legislators recognized the need for the new center but simply could not allocate the necessary funds at this time.
"Everyone involved was very receptive of the idea," he said. "They all recognized the cancer center as worthy but simply couldn't spend any more money."
Kevin Fitzgerald, UNC's lobbying coordinator, said the need for the treatment center is clear.
Officials have said the current facility, the N.C. Clinical Cancer Center, is outdated and too small to accommodate demand.
"The current space is inadequate and cannot continue to accept more patients and traffic growth," he said. "It's good that the new cancer center has been recognized as a need of UNC's Hospitals systems."
Fitzgerald attributed the rejection to the last-minute addition of the treatment center provision into an economic incentives bill.
Some legislators expressed concerns that the session might end before the proposal could be given adequate consideration.