Earlier quoted context omitted.
More importantly, they used the overcrowding excuse as a means to raise $800mm+ from New York taxpayers. If this capital wasn't necessary given the problems they cited were non-existent, this amounts to fraud.
That's not a really fair way to put it as the signaling system is still the root cause of the slowdown. 1. Outdated signaling system cannot handle current load at high safety threshold 2. Network could not upgrade signaling system due to lack of money 3. Network responses by slowing down critical paths and putting in more locks 4. System capacity drops So yeah, you still need the money to fix slow things.
Yes, the signals system needs to be upgraded if they want to increase the number of trains (and their speed) on the lines, but even without the signals system upgrades, they can still run the current loads at acceptably-high levels of safety.
Put another way, they are slowing the trains down and increasing delays while not actually increasing the capacity of the system.