Depends on the format the parcels are in.

If this is a spatially enabled database or a spatially indexed format, the FeatureReader will be the best option, because the index will be used and not all data will be read into FME.

...also, what is the impact of a feature crossing a boundary? This may determine which tool to use. If you clip and a feature crosses a boundary you'll at least know that now you have a duplicated ID with a different state ID recorded against it.

Or if you don't care about the overlap you could just turn your parcels into points using the InsidePointReplacer and then pass them both into the PointOnAreaOverlayer making sure you set the first reader to be the state boudaries reader and then set the PointOnAreaOverlayer's 'Areas First' parameter to "Yes".