Apparently Shas wanted more money that Livni is unwilling to give. There is a video on the link provided.
Livni: I won't sell Israel's future for the prime minister's seat
By Mazal Mualem, Haaretz Correspondent, Haaretz Service and News Agencies
Tags: Israel News, Tzipi Livni The chair of the ruling Kadima party Tzipi Livni on Sunday told President Shimon Peres that she is standing by her decision to go to general elections, saying "I refuse to pawn Israel's future for the prime minister's seat."
Livni, who hopes to become Israel's first female prime minister in three decades, has been trying to recruit a majority of 61 MKs to her coalition since she replaced the corruption-tainted prime minister Ehud Olmert as head of the ruling Kadima Party last month. But partners in the current coalition, which took power in May 2006, used the changing of the guard to press new demands.
Last week, key party Shas announced that it would not join Livni's coalition as its demands were not met. Livni, who termed Shas' demands "extortion," announced that if she was not able to establish a coalition without Shas by Sunday, she would urge the president to call early elections.
Livni told Peres on Sunday that she had done everything she could to try to put together a parliamentary coalition. But she said other parties said they prefer elections.
"If everyone agrees that elections are in order," she told the president, "then we must do it quickly."
http://www.haaretz.com/hasen/spages/1031253.html