Because a state funeral is for the Monarch.
Unless you live in India, where Mother Theresa had a State Funeral, or in Australia, where Australian football icon Johnny Warren was granted a funeral by his home state, he captained Australia to its only appearance in the World Cup finals in 1974.
In Italy, Nicola Calipari, an Italian intelligence officer shot and killed by American troops in Iraq while escorting a former hostage to freedom had a State Funeral. In Spain one was held for the 190 victims of the Madrid train bombings.
An ordinary sailor/Soldier/airman does not warrant that.
Unless you live in Spain, where a State Funeral was held for 17 soldiers killed in a plane crash in Afghanistan, or Italy where 18 Italians (12 paramilitary Carabinieri, four army soldiers and two civilians) killed in a suicide bombing in Iraq had a State Funeral.
So there is no real reason why the last Tommy cannot be honoured in this way.