Can I turn off the "refund transfer" option? For the first time this year, Turbotax is automatically wanting to pay my state tax balance out of my federal refund.

[DawnC]

See Help Removing Fees to remove Refund Processing (Pay with your Refund) fees.   To see your fees, 

1. Open or continue your return.
2. On Tax Home, select Start or Continue to enter your return.
3. Select Tax Tools from the menu, and then Tools.
4. A Tools Center box will pop up on your screen.
5. Select My Fees.

[DoninGA]

The federal tax refund can never be used to pay the state taxes owed for the current tax year.

[VolvoGirl]

The Refund Transfer option is just to have the Turbo Tax FEES for federal and state deducted from your refund.   And there is an extra $40 Pay with Refund service charge ($45 in California).  So pay the fees with a credit card to avoid the extra charge.

And at the end Turbo Tax shows you the net combined federal and state refund/tax due.  But that is only for your own info.  Federal and state are completely separate. You will get the full federal refund and need to pay the state tax due yourself.   

When you file, Look for the state cover sheet with the Turbo Tax logo. If you owed tax, it will show the payment information and how/when you decided to pay. Read the state payment instructions carefully since most states cannot be paid from within the TT system and requires additional steps.

How to review your fees
https://ttlc.intuit.com/community/charges-and-fees/help/how-do-i-review-my-fees-in-turbotax-online/0...

How to remove the Pay with Refund fee
https://ttlc.intuit.com/community/downgrading/help/how-do-i-remove-pay-with-my-refund-fees-in-turbot...