functions.php

<?php

/**
 * Outputs the state link.
 *
 * @param $articles array Array of articles array('url'=>'', 'title'=> '',)
 * @param $state string State name.
 */
function do_state( $articles, $state ) {
  if ( isset( $articles[ $state ] ) ) {
    // do state link open
    printf('<li><div class="state-link">%s</div><ul class="article-list">', $state );
    
    // do articles
    foreach ( $articles[ $state ] as $article ) {
      do_state_article( $article );
    }
    
    // close state link
    echo '</ul></li>';
  } else {
    // do nada
    printf( '<div class="inactive state-link">%s</div>', $state );
  }
}

/**
 * Outputs the state article link
 *
 * @param $artcle array Article array.
 */
function do_state_article( $article ) {
  printf( '<li class="article-list-item"><a class="article-link" href="%s">%s</a></li>', $article['url'], $article['title'] );
}

state.php

<?php

$_terms = get_terms( array( 'state' ) );

  $articles = array();

  foreach ((array)$_terms as $term):
      $_posts = new WP_Query( array(
        'post_type'         => 'page',
        'posts_per_page'    => 10, //important for a PHP memory limit warning
        'tax_query' => array(
          array(
            'taxonomy' => 'state',
            'field'    => 'slug',
            'terms'    => $term->slug,
          ),
        ),
      ) );

      if( $_posts->have_posts() ) :
        $articles[$term_name] = array();

        while ( $_posts->have_posts() ) : $_posts->the_post();
          $articles[$term_name][] = array(
            'title' => get_the_title(),
            'url'   => get_permalink(),
          );
        endwhile;

      endif;
      wp_reset_postdata();

  endforeach;