Most of our area vets send reminders (for vaccines) and the town hall sends the reminder for the license. I've never known anyone to live in an area where they did that though. I would say you are in a rare area. Over here they claim they don't have enough workers to even take care of the problems and neglicted animals that get reported much less send people out to check. The only way you get nailed is if your dog gets loose and gets picked up by the dog control, (and then they will only know if you claim the dog and admit you don't have the papers) or if your dog bites and the authorities have to be called. There's also if someone calls and reports your dog for some reason or turns you in. I'd say the majority of our area's dogs aren't licensed. Mine is UTD on vaccines and licensed. As well as my cat.
In our area where there are so many dog owners there's been a real push by license bureaus and vets to get pets micro-chipped. Friends of ours rescued a Jack Russell on the road a couple days ago and are going to the local shelter to see if the dog is micro-chipped to return it to its owner. She's lactating so there are puppies somewhere getting neglected.