Your neighbor is very likely violating city/county ordinances relating to keeping control of their animal. Report it to the police and animal control if you see the animal loose. Consult with an attorney for any injuries caused by the animal.
This answer is for general purposes only and does not establish an attorney-client relationship. Consult with an attorney if you need further assistance.
In addition to what my colleague stated above, also look into getting some kind of deterrent to protect your yard (odor, electric fence, etc) to help keep the dog out.
Keep documenting and immediately reporting each violation; both to the PD and Animal Control.
Also, get a can of STREAM, not mist, pepper spray (oleoresin capsicum; NOT mace). It is effective against dogs; mere mace is not.
The foregoing is for general information purposes and does not establish an attorney-client relationship.
Sign up to receive a 3-part series of useful information and advice about personal injury law.