The information you see regarding your state refund on 1099-G comes from last year's tax payments and withholdings. The help link explains ''Add up any payments you made to your state or locality, along with any state or locality withholdings from the previous tax year''. You are asked this to determine whether or not your state refund is taxable on this year's return. If you itemized last year, it isn't. If you filed with TurboTax last year, that box is auto-populated with last year's amounts.
See this link - the highlighted sentence refers to the questions you are being asked on this return.
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