[morethanpretty]

I like cats, but I'm a dog person through and through.
I would talk to the neighbors first, but if nothing changes, complain.
If they were letting it lose but standing right with it, keeping an eye on it, preventing it from bothering neighbors and such, then I would be fine with that. Since you say they aren't though, then definitely cannot be allowed to go on. Many reasons too, other than danger to people/kids. There is a danger to the dog itself, if they aren't with it: then they aren't cleaning up its messes, and it is probably annoying neighbors.