I would call the town's animal control officer and ask for advice. That gets it on record that this dog is going after your dogs and taking down your fence in the process. He/she will pay a visit to them and see if something can be done amicably.
I don't see why any of the expense should be yours. Your fence is on your property, and therefore so is their dog.
They can put up their own fence again, put in an electric fence & train the dog, or put the dog on a run. Lots of choices. But you paying for a new fence that someone else is destroying is not on the list.