Public investment is a key driver of economic growth, but local governments strongly differ in their ability to invest. In multi-level systems, they often depend on subsidies from higher levels of government to finance investment spending. In this paper, we argue that the distribution of investment subsidies is often driven by political factors instead of equity or efficiency considerations. Concretely, we expect parties to engage in budgetary clientelism, meaning that higher-level politicians grant more investment subsidies to districts in which co-partisans govern than districts where this is not the case. We compiled a new dataset of investment subsidies to all German districts from 1995 to 2018 from the federal as well as the state governments and coded the partisanship of governments on all three levels. We then use matching techniques and difference-in-difference estimators to identify the causal effect of political alignment on the subsidies that districts receive. The results show that budgetary clientelism frequently occurs when state governments grant investment subsidies to districts, while no such practices exist for federal subsidies. This effect is strongly connected to the political election cycle, particularly strong in electorally contested districts and mainly a phenomenon of right-wing parties.