Because he didn't want to.
He could have stopped the deficit dead in its tracks without violating any constitutional provisions or running afoul of legilstive formulas. He simply chose not to cut spending to match revenues.
He did the opposite. He proposed and approved double digit increases in state spending, even in the face of insufficient revenue and ... only weeks after saddling the General Fund with $4B in increased operating expenses.
(No more Olmert! No more Kadima! No more Oslo! )