Your license fees help pets and animal lovers in your community. They may go towards paying an animal control officer's salary, which in turn can save helpless animals from being abused. The fees may help fund spay/neuter programs to reduce overpopulation. The license fees may make community education programs possible. If your town has a public animal shelter (instead of a privately owned shelter), licensing fees may help keep it running and finding homes for stray or surrendered pets.
Last but not least, paying for that license on time will save you trouble and money if your pets should get picked up without a license. After a certain date, your fees will increase. In my town, the deadline is the end of March, but your town may have different rules. Refusing to have your pets licensed can result in a ticket from local law enforcement, if you are in a multi-pet family, the penalties can get pretty high!
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Dog licenses can come loose and get lost, if your dog is as active as ours, as evidenced by the few I have come across at our favorite dog park. Make copies of your dog's license and the paperwork that came with it.