Dog troubles

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So I have posted before and this is a bit controversial as some people will feel we are right other will feel the dog owner is right.

So we have lived in our home almost 4 years an ab 3 years ago we had some neighbors move in next door. They're great neighbors except for their dog......

Their dog has tried to attack a child in our yard before and has growled at my husband and I numerous times. After the dog tried to bit the child we called animal control who basically said if it happens again shoot the dog. We DO NOT ever want to have that situation occur. But for a while they kept the dog restrained while outdoor.

Our town doesnt have a leash law but if a dog has been deemed vicious (this one has) it must be kept in a fence or detained somehow

Now they're letting the dog run free again and it is growling at us again and we dont even feel comfortable taking our kids outside to play in our own yard.

I'm really at a loss for how to proceed.