Arizona return says I entered $986 of non-Arizona municipal interest on my federal return. That number isn't on the 1099-INT forms I have from Schwab. Where is it from?

TurboTax transfers data from your federal return to your state return. Before you begin troubleshooting your state return, go back through your federal return and make sure all the entries for your 1099-INT are correct.

After you review your federal return, select the State Taxes tab and review the state section. Pay close attention to the information, especially if you have made changes to your federal return. There might be new sections that need to be completed. 

Troubleshooting common federal to state transfer issues

if you didn't have any 1099-INT Box 8 then it could also come from 1099-DIV Box 12 if you had mutual or money market funds with tax exempt dividends.

are you saying you didn't have munis and these boxes are zero, or it doesn't match what you expected?  1099-INT Box 8 may also be adjusted by premium (Box 13) or accrued interest.