Well the revenue from pet licenses in my city support animal control specifically, which is decent in my city and as I've said I'm happy to support them. They do a fair amount of community education, humane investigations, and sheltering. The city license is also required to get a city-run off leash park license (overseen by the park and rec department, not animal control, which is why they are two separate licenses), which allows me access to a really stellar dog park down on the river bottoms.
For my pets specifically, if lost they get a free ride directly to my home from animal control instead of getting taken to the shelter. Our AC has also put together a little rewards card with several local businesses that gives you discounts. But most importantly to me, it's important to me to keep that paper trail of a "responsible" dog owner. ETA: The same reason I got a CGC for Squash, really. It doesn't mean THAT much to me, but it looks good for a big, intimidating muscly dog to have as many publicly perceived positive things on his side if anything or anyone sketchy happens.
There are all sorts of things that municipalities micromanage about citizens' property that specify what you can and can't do. Honestly, there's no "principal of the thing" that I feel oppressed over, nor would this be the hill I wanted to die on even if I did. And I don't mind paying fees if I get stuff I value out of it - which I feel I do, both personally and for animals in my community as a whole.
(FWIW I don't license my cats even though legally I'm supposed to, because they never leave the house and nobody is going to accuse my 10# cat of anything nefarious.)