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In the main Dividend entry screen, click the box "My form has info in other boxes" to open up the entire 1099-Div screen and enter your state in the state in box 13 then continue. This seems to clear the error and allows the US Govt portion of the dividend to no be taxed at the state level.
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I had the same issue. It turns out that simply checking the My form has info in other boxes (this is uncommon) checkbox is sufficient to workaround the issue. I did not need to specify anything in box 13 which I prefer since my 1099-DIV did not either. This is a bug in TurboTax and should be fixed.
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