Israel is running into the same problem the American founding fathers anticipated and wanted to avoid when they made America into a secular country. When you intermingle religion and state, both of those things get corrupted.

Fundamentalists always demand to have everyone else follow their rules, especially if you're claiming to be a religious state. That's an unmitigated disaster for rational policy setting.

And the state will also taint the religion because all governments do terrible things at some point. So, then everyone in that religion gets associated and smeared with the horrible actions of the government.

Those are among the reasons why setting up a religious state is always a bad idea. It will lead to ironic, unintended consequences of actually damaging the religion, rather than protecting it.